Measuring the diversity of household spending patterns
MetadataShow full item record
Households tend to diversify their spending across a wide range of goods and services as they become more affluent. Recently, there has been growing interest in understanding the precise manner in which this spending diversification process takes place. We review what facts are known about this process and the underlying behavioural tendencies that are thought to drive it. In addition, we clarify the relationship between different approaches to measuring the level of spending diversity. A number of indices are employed, including measures based on joint probabilities, distances and the concept of entropy. Using UK household spending data, we show the extent to which these measures deliver different results and shed light on the nature of behavioural heterogeneity.
Journal of Economic Surveys
© 2014 Blackwell Publishing Ltd. This is the pre-peer reviewed version of the following article: Measuring the diversity of household spending patterns, Journal of Economic Surveys, which has been published in final form at dx.doi.org/10.1111/joes.12066.
Applied Economics not elsewhere classified