The Scope of the Unit Value Problem

Timothy Beatty

No 6833, Consumer and Market Demand Network Papers from University of Alberta, Department of Resource Economics and Environmental Sociology

Abstract: This paper investigates the scope of the unit value problem in household level expenditure data. Specifically, to what extent do unit values and prices coincide. I test whether self-reported prices vary with covariates thought to be important in household demand behavior. In addition, I measure the expenditure elasticity of quality for 196 distinct food aggregates. Approximately half of the expenditure elasticities estimated are significantly different from zero, suggesting that unit values and prices do not coincide in most cases. Finally, a generalization of the standard quality demand regression is proposed, in which the expenditure elasticity of quality is allowed to vary over the range of total food expenditure. Some food aggregates display significant nonlinearities, providing further evidence of the difference between prices and unit values.

Keywords: Consumer/Household; Economics (search for similar items in EconPapers)
Pages: 29
Date: 2007
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:ualbnp:6833

DOI: 10.22004/ag.econ.6833

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