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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 examines whether donor investments in a market channel that rewards product quality increase food security in Rwanda. Specifically, do policy interventions that improve marketing channels increase the price received by farmers also increases smallholder income? Furthermore, does this increase in income improve food security?

To examine the effect of the policy intervention, we estimates the relationship between the share of income spent on food and income (Working’s Model) using ordinary least squares and a logit regression.

The empirical results support Working’s conjecture (i.e., the share of income spent on food declines as income increases). Furthermore, whether the household benefits from the improved market channel does not affect the share of income spent on food.

Increased household income appears to improve food security. However, the lack of a statistically significant effect of the policy intervention variable indicates that commercial agriculture does not eliminate household food production at home.

Although preference for sons has been documented among parents in developing countries, it is an open question whether and to what extent intra-household resource allocation is influenced by family sex composition. This study investigates the effects of sex composition on intra-household resource allocation based on the collective household model of Dunbar, Lewbel, and Pendakur (2013). I extend their model to estimate the influences on a household member’s resource share by observing how budget shares of a private assignable good vary not only with total expenditure and family size, but also with family sex composition. Using data from the 2005 Iranian Household Income and Expenditure Survey, I find that family composition significantly affects intra-household resource allocation in Iranian rural areas. Specifically, rural parents assign 1.6–1.9 percentage points more resources toward their sons. These resources are essentially coming at the expense of mothers. In all-boy families, mothers get 2.8–3.6 percentage points fewer resources than they do in all-girl families. These effects are more pronounced among farmer families than nonfarmer families. However, I find no significant role for gender composition in intra-household resource allocation in urban areas.