Food and Cross-Country Income Comparisons

Grace Lin
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Grace Lin: UWA Business School, The University of Western Australia

No 03-14, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: This paper examines the idea of making international income comparisons on the basis of food consumption patterns. We commence by giving a brief review on the different ways of measuring real income and highlight some of the problems. Next, we embark on an international journey by analyzing food consumption in 43 countries using Working’s (1943) model as the “travel mode”. We show that this model yields results which are consistent with other studies. In particular, our data seem to obey the so-called “strong version of Engel’s law”, according to which a doubling of income is associated with the food budget share declining by 10 percentage points. On this basis, we then use the food budget share to develop an alternative measure of real income. We provide evidence that this new measure is superior to conventional PPP versions of gross domestic product and consumption.

Pages: 28 pages
Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:uwa:wpaper:03-14

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