Template-Type: ReDIF-Paper 1.0
Title: Individual versus Aggregate Income Elasticities for Heterogeneous Populations
Author-Name: Michal Paluch
Author-Name: Alois Kneip
Author-Name: Werner Hildenbrand
Author-Email: paluch@uni-bonn.de
Classification-JEL: D11, D12, C14
Keywords: household demand, aggregation, heterogeneity, nonparametric methods
Abstract: This paper deals with different concepts of income elasticities of 
	demand for a heterogenous population and the relationship between 
	individual and aggregate elasticities is analyzed. In general, the 
	aggregate elasticity is  not equal to the mean of individual 
	elasticities. The difference depends on the heterogeneity of the 
	population and is quantified by a covariance term. Sign and  magnitude 
	of this term are determined by an empirical analysis based on the U.K. 
	Family Expenditure Survey. It is shown that the relevant quantities can 
	be identified from cross-section data and, without imposing restrictive 
	structural assumptions, can be estimated by nonparametric techniques. It 
	turns out that the aggregate elasticity significantly overestimates the 
	mean of individual elasticities for many commodity groups.
Note: 
Length: 34
Creation-Date: 2007-08
Revision-Date: 
File-URL: http://www.wiwi.uni-bonn.de/bgsepapers/bonedp/bgse13_2007.pdf
File-Format: application/pdf
Handle: RePEc:bon:bonedp:bgse13_2007