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Why Does the Engel Method Work? Food Demand, Economies of Size and Household Survey Methods

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Abstract

Estimates of household size economies are needed for the analysis of poverty and inequality. This paper shows that Engel estimates of size economies are large when household expenditures are obtained by respondent recall but small when expenditures are obtained by daily recording in diaries. Expenditure estimates from recall surveys appear to have measurement errors correlated with household size. As well as demonstrating the fragility of Engel estimates of size economies, these results help resolve a puzzle raised by Deaton and Paxson (1998) about differences between rich and poor countries in the effect of household size on food demand.

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  • John Gibson, 2002. "Why Does the Engel Method Work? Food Demand, Economies of Size and Household Survey Methods," Working Papers in Economics 02/02, University of Waikato.
    • Handle: RePEc:wai:econwp:02/02
    Note: Published in "Oxford Bulletin of Economics and Statistics", 64(4) September 2002, pp.341-59.
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    File URL: https://repec.its.waikato.ac.nz/wai/econwp/0202.pdf
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    1. repec:bla:revinw:v:45:y:1999:i:4:p:455-82 is not listed on IDEAS
    2. Angus Deaton & Christina Paxson, 1998. "Economies of Scale, Household Size, and the Demand for Food," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 897-930, October.
    3. Geoffrey Lancaster & Ranjan Ray & Maria Rebecca Valenzuela, 1999. "A Cross‐Country Study Of Equivalence Scales And Expenditure Inequality On Unit Record Household Budget Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 45(4), pages 455-482, December.
    4. Lanjouw, Peter & Ravallion, Martin, 1995. "Poverty and Household Size," Economic Journal, Royal Economic Society, vol. 105(433), pages 1415-1434, November.
    5. Dreze, Jean & Srinivasan, P. V., 1997. "Widowhood and poverty in rural India: Some inferences from household survey data," Journal of Development Economics, Elsevier, vol. 54(2), pages 217-234, December.
    6. Coulter, Fiona A E & Cowell, Frank A & Jenkins, Stephen P, 1992. "Equivalence Scale Relativities and the Extent of Inequality and Poverty," Economic Journal, Royal Economic Society, vol. 102(414), pages 1067-1082, September.
    7. Isabel McWhinney & Harold E. Champion, 1974. "The Canadian Experience with Recall and Diary Methods in Consumer Expenditure Surveys," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 3, number 2, pages 411-437, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    food demand; economies of size; household surveys; measurement error;
    All these keywords.

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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