Search results

Supposing that decisionmakers in any country and at any point in time tolerate a certain fixed level of perceived poverty, differences in poverty aversion are called for to explain observed international and intertemporal variations in poverty statistics. Under the Natural Rate of Subjective Poverty hypothesis advanced in this paper, variations in the degree of poverty aversion are estimable and can be explained by political and socioeconomic factors. The methodology is applied to US data from 1975 to 1998 and across nations using cross-section data from the mid-1990s. Factors such as the political affiliation of government officials, public expenditure, per capita income, and economic growth account for much of the variation in poverty aversion implied by our hypothesis. The relationship between inequality aversion and poverty aversion is also explored, with the aid of a parallel “natural rate” hypothesis for inequality (Lambert et al., 2003). Our findings provide a new framework in which to interpret observed correlations between poverty, inequality, and social welfare.

Lewbel and Pendakur (2009) developed the idea of implicit Marshallian demands. Implicit Marshallian demand systems allow the incorporation of both unobserved preference heterogeneity and complex Engel curves into consumer demand analysis, circumventing the standard problems associated with combining rationality with either unobserved heterogeneity or high rank in demand (or both). They also developed the exact affine Stone index (EASI) implicit Marshallian demand system wherein much of the demand system is linearised and thus relatively easy to implement and estimate. This chapter offers a less technical introduction to implicit Marshallian demands in general and to the EASI demand system in particular. I show how to implement the EASI demand system, paying special attention to tricks that allow the investigator to further simplify the problem without sacrificing too much in terms of model flexibility. STATA code to implement the simplified models is included throughout the text and in an appendix.

This chapter is an up-to-date survey of the state-of-the art in consumer demand analysis. We review (and evaluate) advances in a number of related areas, in the spirit of the recent survey paper by Barnett and Serletis (2008). In doing so, we only deal with consumer choice in a static framework, ignoring a number of important issues, such as, the effects of demographic or other variables that affect demand, welfare comparisons across households (equivalence scales), and the many issues concerning aggregation across consumers.

This chapter presents the differential approach to applied demand analysis. The demand systems of this approach are general, having coefficients that are not necessarily constant. We consider the Rotterdam parameterization of differential demand systems and derive the absolute and relative price versions of the Rotterdam model, due to Theil (1965) and Barten (1966). We address estimation issues and point out that, unlike most parametric and semi-nonparametric demand systems, the Rotterdam model is econometrically regular.

A concise introduction to the normalized quadratic expenditure or cost function is provided so that the interested reader will have the necessary information to understand and use this functional form. The normalized quadratic is an attractive functional form for use in empirical applications as correct curvature can be imposed in a parsimonious way without losing the desirable property of flexibility. We believe it is unique in this regard. Topics covered include the problem of cardinalizing utility, the modeling of nonhomothetic preferences, the use of spline functions to achieve greater flexibility, and the use of a “semiflexible” approach to make it feasible to estimate systems of equations with a large number of commodities.

Advances in Econometrics is a series of research annuals first published in 1982 by JAI Press. In this paper, we present a brief history of the series over its first 30 years. We describe key events in the history of the volume, and give information about the key contributors: editors, editorial board members, Advances in Econometrics Fellows, and authors who have contributed to the great success of the series.

This chapter reviews the specification and application of the Deaton and Muellbauer's (1980) almost ideal demand system (AIDS) and the Christensen et al. (1975) translog (TL) demand system. In so doing we examine various refinements to these models, including ways of incorporating demographic effects, methods by which curvature conditions can be imposed, and issues associated with incorporating structural change and seasonal effects. We also review methods for adjusting for autocorrelation in the models' residuals. A set of empirical examples for the AIDS and the log TL version of the translog based on historical meat price and consumption data for the United States are also presented.