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Abstract Details
Activity Number:
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467
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Type:
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Contributed
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Date/Time:
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Wednesday, August 1, 2012 : 8:30 AM to 10:20 AM
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Sponsor:
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Business and Economic Statistics Section
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Abstract - #304295 |
Title:
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Modeling Consumer Demand Systems for a Variety of Goods
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Author(s):
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Ignacio Vidal*+ and Walter Gómez and Felipe Vásquez
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Companies:
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Universidad de Talca and Universidad de La Frontera and Universidad de Concepción
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Address:
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2 Norte 685, Talca, , Chile
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Keywords:
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Demand system models ;
Kuhn-Tucker approach ;
discrete-continuous distribution ;
quadratic utility function
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Abstract:
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The main objective of this work is to answer the following question, how is the distribution of the consumers expenditure on a set of consumption goods? Since many of goods are not consumed, the sample contains a significant proportion of observations in which expenditure on one or more goods is zero. There are several works that approach this problem by using a continuous joint distribution which assigns a positive probability for zero expenditures. Some of this works have deduced a complicated likelihood function requiring multi-dimensional integration by numerical methods. Besides, the complexity increases with the number of alternatives. Other works obtain a closed form for the likelihood by assuming the standard extreme value distribution for the errors. This assumption together with advances in computing power have permitted to make inferences with a larger numbers of choice alternatives. However, the use of the extreme value distribution only is justified by its mathematical tractability. In this work, we give a method to obtain a closed form for the expression of the consumer demand model for any number of goods and assuming a more reasonable distribution for the errors.
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