Ethan A. Ligon, University of California, Berkeley
Estimating Household Welfare from Disaggregate Expenditure
Date and Location
Thursday, September 27, 2018, 4:10 PM - 5:30 PM
Giannini Library Conference Room, 4101
Social Sciences and Humanities
Abstract
Existing models of life-cycle demand typically assume that expenditure shares for particular goods within a period are fixed, but this is at sharply at odds with strong empirical evidence, including Engel's Law. We show how one can use data on disaggregate expenditures to estimate demand systems that are flexible and may feature highly non-linear Engel curves; this same procedure yields an index of household welfare closely related to the marginal utility of expenditures within a period. We use these methods with repeated cross-sectional expenditure surveys from Uganda to estimate an incomplete demand system and household welfare in different periods.