Consumer Demand

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V. Lechene and I. Preston, 2011,"Noncooperative Household Demand" Journal of Economic Theory 146, 504-527

We study noncooperative household models with two agents and several voluntarily contributed public goods, deriving the counterpart to the Slutsky matrix and demonstrating the nature of the deviation of its properties from those of a true Slutsky matrix in the unitary model. We provide results characterising both cases in which there are and are not jointly contributed public goods. Demand properties are contrasted with those for collective models and conclusions drawn regarding the possibility of empirically testing the collective model against noncooperative alternatives and the noncooperative model against a general alternative.

I. Crawford, F. Laisney and I. Preston, 2003,"Estimation of Household Demand Systems with Theoretically Compatible Engel Curves and Unit Value Specifications" Journal of Econometrics 114, 221-241

We develop a method for estimation of price reactions using unit value data which exploits the implicit links between quantity and unit value choices. This allows us to combine appealing Engel curve specifications with a model of unit value determination in a way which is consistent with demand theory, unlike methods hitherto prominent in the literature. The method is applied to Czech data.

J. Banks, R. Blundell and I. Preston, 1994,"Life Cycle Expenditure Allocations and the Consumption Costs of Children," European Economic Review 38, 1391-1410.

In this paper we assess whether it is changing needs or intertemporal substitution that dominate household expenditure responses to the presence of children over the life-cycle. We construct lifetime expenditure paths for households with different demographic profiles and consider the shape of these paths and some possible implications for welfare measures. Simulated expenditure paths based on consistent single-period and multi-period models indicate that it is indeed changing needs that dominate such paths in periods when children are present in the household. However, allowing for intertemporal substitution is still shown to be important since it can introduce new information relevant to the calculation of household welfare.

Ian Preston
Department of Economics
University College London
Gower Street, London WC1E 6BT