2011-05: Reviving a wants-based empirical approach to analysing household spending (Working paper)
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Author(s)
Chai, Andreas
Griffith University Author(s)
Year published
2011
Metadata
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This paper develops a new approach to the analysis of how households tend to diversify their spending: the approach is to measure empirically how widely their total spending is distributed across different expenditure categories. Based on UK spending data spanning over 50 years, our results suggest that the diversification of household expenditure patterns takes place in such a way that, as household income rises, total household expenditure is distributed across different goods in an increasingly even manner. Moreover, when examining how household diversification patterns changed over time, we find evidence that there has ...
View more >This paper develops a new approach to the analysis of how households tend to diversify their spending: the approach is to measure empirically how widely their total spending is distributed across different expenditure categories. Based on UK spending data spanning over 50 years, our results suggest that the diversification of household expenditure patterns takes place in such a way that, as household income rises, total household expenditure is distributed across different goods in an increasingly even manner. Moreover, when examining how household diversification patterns changed over time, we find evidence that there has been acceleration in the rate at which household expenditure patterns become diversified as household income rises. This represents a fascinating result, given that income inequality increased by 10 percentage points in the UK during the same period (Atkins 1997).
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View more >This paper develops a new approach to the analysis of how households tend to diversify their spending: the approach is to measure empirically how widely their total spending is distributed across different expenditure categories. Based on UK spending data spanning over 50 years, our results suggest that the diversification of household expenditure patterns takes place in such a way that, as household income rises, total household expenditure is distributed across different goods in an increasingly even manner. Moreover, when examining how household diversification patterns changed over time, we find evidence that there has been acceleration in the rate at which household expenditure patterns become diversified as household income rises. This represents a fascinating result, given that income inequality increased by 10 percentage points in the UK during the same period (Atkins 1997).
View less >
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Copyright © 2010 by author(s). No part of this paper may be reproduced in any form, or stored in a retrieval system, without prior permission of the author(s).
Note
Economics and Business Statistics
Subject
D11 - Consumer Economics: Theory
D12 - Consumer Economics: Empirical Analysis
D31 - Personal Income, Wealth, and Their Distributions
Diversity in consumption
economic inequality
living standards
Engel's Law