A QUADRATIC ENGEL CURVE DEMAND MODEL (squaring with the representative consumer)

J. van Daal and A. S. Louter

No 272179, Econometric Institute Archives from Erasmus University Rotterdam

Abstract: This paper starts with some reflections on the notion of the representative consumer. These reflections result in the conclusion that the "average consumer" is - in general - not a representative consumer in the sense that he may be considered as a (fictitious) consumer acting in the same way as the individual consumers are supposed to do, i.e. maximizing their utility subject to a budget constraint. Nevertheless, relations between per capita consumption on the one hand and income and prices on the other hand, may be such that, though being non-linear in income, they are "aggregation consistent". This is at the cost of more information on incomes. Here we used a time series of the coefficients of variation of the income distribution in the Netherlands, leading to a Quadratic Engel Curve (Q.E.C.) demand system.

Keywords: Demand and Price Analysis; Research Methods/Statistical Methods (search for similar items in EconPapers)
Pages: 37
Date: 1979
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Persistent link: https://EconPapers.repec.org/RePEc:ags:eureia:272179

DOI: 10.22004/ag.econ.272179

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