IDEAS home Printed from https://ideas.repec.org/a/bla/ecinqu/v49y2011i4p1008-1028.html
   My bibliography  Save this article

Economies Of Scale In The Household: Puzzles And Patterns From The American Past

Author

Listed:
  • TREVON D. LOGAN

Abstract

Household economies of scale arise when households with multiple members share public goods, making larger households better off at lower per capita expenditures. While estimates of household economies of scale are critical for measuring income and living standards, we do not know how these scale economies change over time. I use American household expenditure surveys to produce the first comparable historical estimates of household scale economies. I find that scale economies changed significantly from 1888 to 1935 for all expenditure categories considered (food, clothing, entertainment, and housing), but not all trends in scale economies are consistent with theoretical predictions. I use these historical estimates of household scale economies to resolve several theoretical and empirical puzzles in the literature. I find that existing explanations for puzzles in the household economies of scale literature do not hold in the past. As such, our notions about household economies of scale must be reassessed in light of this historical evidence.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Trevon D. Logan, 2011. "Economies Of Scale In The Household: Puzzles And Patterns From The American Past," Economic Inquiry, Western Economic Association International, vol. 49(4), pages 1008-1028, October.
    • Handle: RePEc:bla:ecinqu:v:49:y:2011:i:4:p:1008-1028
    DOI: j.1465-7295.2009.00240.x
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/j.1465-7295.2009.00240.x
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/j.1465-7295.2009.00240.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. François Gardes & Christophe Starzec, 2000. "Economies of scale and food consumption: A reappraisal of the Deaton-Paxson paradox," Post-Print halshs-03721665, HAL.
    2. Reuben Gronau & Daniel S. Hamermesh, 2008. "The Demand for Variety: A Household Production Perspective," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 562-572, August.
    3. Pollak, Robert A & Wales, Terence J, 1979. "Welfare Comparisons and Equivalence Scales," American Economic Review, American Economic Association, vol. 69(2), pages 216-221, May.
    4. Jeremy Greenwood & Ananth Seshadri & Mehmet Yorukoglu, 2005. "Engines of Liberation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(1), pages 109-133.
    5. Muellbauer, John, 1977. "Testing the Barten Model of Household Composition Effects and the Cost of Children," Economic Journal, Royal Economic Society, vol. 87(347), pages 460-487, September.
    6. Richard W. Blundell & Martin Browning & Ian A. Crawford, 2003. "Nonparametric Engel Curves and Revealed Preference," Econometrica, Econometric Society, vol. 71(1), pages 205-240, January.
    7. John Gibson, 2002. "Why Does the Engel Method Work? Food Demand, Economies of Size and Household Survey Methods," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 64(4), pages 341-359, September.
    8. Mark Aguiar & Erik Hurst, 2007. "Life-Cycle Prices and Production," American Economic Review, American Economic Association, vol. 97(5), pages 1533-1559, December.
    9. Reuben Gronau & Daniel S. Hamermesh, 2006. "Time Vs. Goods: The Value Of Measuring Household Production Technologies," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 52(1), pages 1-16, March.
    10. Pollak, Robert A & Wales, Terence J, 1981. "Demographic Variables in Demand Analysis," Econometrica, Econometric Society, vol. 49(6), pages 1533-1551, November.
    11. François Gardes & Christophe Starzec, 2000. "Economies of scale and food consumption: A reappraisal of the Deaton-Paxson paradox," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-03721665, HAL.
    12. Logan, Trevon D., 2009. "The Transformation of Hunger: The Demand for Calories Past and Present," The Journal of Economic History, Cambridge University Press, vol. 69(2), pages 388-408, June.
    13. Pollak, Robert A & Wales, Terence J, 1980. "Comparison of the Quadratic Expenditure System and Translog Demand Systems with Alternative Specifications of Demographic Effects," Econometrica, Econometric Society, vol. 48(3), pages 595-612, April.
    14. Arthur Lewbel, 1985. "A Unified Approach to Incorporating Demographic or Other Effects into Demand Systems," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(1), pages 1-18.
    15. Angus Deaton & Christina Paxson, 1998. "Economies of Scale, Household Size, and the Demand for Food," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 897-930, October.
    16. Li Gan & Victoria Vernon, 2003. "Testing the Barten Model of Economies of Scale in Household Consumption: Toward Resolving a Paradox of Deaton and Paxson," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1361-1377, December.
    17. Victoria Vernon, 2004. "Food Expenditure, Food Preparation Time and Household Economies of Scale," Labor and Demography 0412005, University Library of Munich, Germany.
    18. Dora L. Costa, 1999. "American Living Standards: Evidence from Recreational Expenditures," NBER Working Papers 7148, National Bureau of Economic Research, Inc.
    19. repec:ebl:ecbull:v:4:y:2002:i:9:p:1-7 is not listed on IDEAS
    20. Angus Deaton & Christina Paxson, 2003. "Engel's What? A Response to Gan and Vernon," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1378-1381, December.
    21. Nelson, Julie A, 1988. "Household Economies of Scale in Consumption: Theory and Evidence," Econometrica, Econometric Society, vol. 56(6), pages 1301-1314, November.
    22. J. L. Nicholson, 1976. "Appraisal Of Different Methods Of Estimating Equivalence Scales And Their Results," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 22(1), pages 1-11, March.
    23. repec:bla:obuest:v:64:y:2002:i:4:p:341-59 is not listed on IDEAS
    24. Logan, Trevon D., 2006. "Nutrition and Well-Being in the Late Nineteenth Century," The Journal of Economic History, Cambridge University Press, vol. 66(2), pages 313-341, June.
    25. Yatchew, A., 1997. "An elementary estimator of the partial linear model," Economics Letters, Elsevier, vol. 57(2), pages 135-143, December.
    26. Federico Perali, 2002. "Some curiosites about the Engel method to estimate equivalence scales," Economics Bulletin, AccessEcon, vol. 4(9), pages 1-7.
    27. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, January.
    28. Gardes, F. & Starzec, C., 2000. "Economies of Scale and Food Consumption : a Reappraisal of the Deaton-Paxson Paradox," Papiers d'Economie Mathématique et Applications 2000.08, Université Panthéon-Sorbonne (Paris 1).
    29. Bruce W. Hamilton, 2001. "Using Engel's Law to Estimate CPI Bias," American Economic Review, American Economic Association, vol. 91(3), pages 619-630, June.
    30. John Gibson & Bonggeun Kim, 2007. "Measurement Error in Recall Surveys and the Relationship between Household Size and Food Demand," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(2), pages 473-489.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Stefan Öberg, 2015. "Sibship size and height before, during, and after the fertility decline," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 32(2), pages 29-74.
    2. Schneider, Kate R., 2022. "Nationally representative estimates of the cost of adequate diets, nutrient level drivers, and policy options for households in rural Malawi," Food Policy, Elsevier, vol. 113(C).
    3. Maneka Jayasinghe & Christine Smith, 2021. "Poverty Implications of Household Headship and Food Consumption Economies of Scales: A Case Study from Sri Lanka," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 155(1), pages 157-185, May.
    4. Echeverría, Lucía & Molina, José Alberto, 2022. "Exploring household heterogeneities of the Deaton-Paxson puzzle: Evidence for Argentina," Nülan. Deposited Documents 3622, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    5. Berendeeva, Ekaterina & Ratnikova, Tatiana, 2016. "The Deaton–Paxson paradox in the consumption of Russian households," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 42, pages 54-74.
    6. Headey, Derek & Hirvonen, Kalle & Alderman, Harold, 2024. "Estimating the cost and affordability of healthy diets: How much do methods matter?," Food Policy, Elsevier, vol. 126(C).
    7. Alejandrina Salcedo & Todd Schoellman & Michèle Tertilt, 2012. "Families as roommates: Changes in U.S. household size from 1850 to 2000," Quantitative Economics, Econometric Society, vol. 3(1), pages 133-175, March.
    8. Karbasi, A. & Mohammadzadeh, S.H., 2018. "Estimating Household Expenditure Economies of Scale in Iran," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277152, International Association of Agricultural Economists.
    9. Timothy J. Halliday, 2010. "Mismeasured Household Size and its Implications for the Identification of Economies of Scale," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(2), pages 246-262, April.
    10. Jayasinghe, Maneka & Chai, Andreas & Ratnasiri, Shyama & Smith, Christine, 2017. "The power of the vegetable patch: How home-grown food helps large rural households achieve economies of scale & escape poverty," Food Policy, Elsevier, vol. 73(C), pages 62-74.
    11. Akresh, Richard & Edmonds, Eric V., 2010. "The Analytical Returns to Measuring a Detailed Household Roster," IZA Discussion Papers 4759, Institute of Labor Economics (IZA).
    12. Sanae Tashiro, 2009. "Differences in Food Preparation by Race and Ethnicity: Evidence from the American Time Use Survey," The Review of Black Political Economy, Springer;National Economic Association, vol. 36(3), pages 161-180, December.
    13. Jacobson, David & Mavrikiou, Petroula M. & Minas, Christos, 2010. "Household size, income and expenditure on food: The case of Cyprus," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(2), pages 319-328, April.
    14. Gutierrez, Federico H., 2018. "A Sharing Model of the Household: Explaining the Deaton-Paxson Paradox and Computing Household Indifference Scales," GLO Discussion Paper Series 166, Global Labor Organization (GLO).
    15. Schneider, Kate, 2021. "Nationally Representative Estimates of the Cost of Adequate Diets, Nutrient Level Drivers, and Policy Options for Households in Rural Malawi," 2021 Conference, August 17-31, 2021, Virtual 315035, International Association of Agricultural Economists.
    16. Henderson, Heath & Follett, Lendie, 2022. "Targeting social safety net programs on human capabilities," World Development, Elsevier, vol. 151(C).
    17. Tscharaktschiew, Stefan & Hirte, Georg, 2010. "How does the household structure shape the urban economy?," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 498-516, November.
    18. Md. Matiur Rahman & Seung-Hoon Jeon & Kyoung-Soo Yoon, 2020. "Estimation of Equivalence Scale and Assessment of Its Impact on Poverty Measurement in Bangladesh," Sustainability, MDPI, vol. 12(21), pages 1-13, October.
    19. Donald Vitaliano, 2015. "A note on the ‘food paradox’: some contradictory evidence," Review of Economics of the Household, Springer, vol. 13(4), pages 1043-1053, December.
    20. Trevon D. Logan, 2008. "Are Engel Curve Estimates of CPI Bias Biased?," NBER Working Papers 13870, National Bureau of Economic Research, Inc.
    21. Shari Eli & Nicholas Li, 2015. "Caloric Requirements and Food Consumption Patterns of the Poor," NBER Working Papers 21697, National Bureau of Economic Research, Inc.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Perali, Federico, 2008. "The second Engel law: Is it a paradox?," European Economic Review, Elsevier, vol. 52(8), pages 1353-1377, November.
    2. Trevon D. Logan, 2008. "Are Engel Curve Estimates of CPI Bias Biased?," NBER Working Papers 13870, National Bureau of Economic Research, Inc.
    3. Jayasinghe, Maneka & Chai, Andreas & Ratnasiri, Shyama & Smith, Christine, 2017. "The power of the vegetable patch: How home-grown food helps large rural households achieve economies of scale & escape poverty," Food Policy, Elsevier, vol. 73(C), pages 62-74.
    4. Karbasi, A. & Mohammadzadeh, S.H., 2018. "Estimating Household Expenditure Economies of Scale in Iran," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277152, International Association of Agricultural Economists.
    5. Gibson, John, 2003. "Does Measurement Error Explain a Paradox About Household Size and Food Demand? Evidence from Variation in Household Survey Methods," 2003 Annual meeting, July 27-30, Montreal, Canada 22198, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Pashardes, Panos, 1995. "Equivalence scales in a rank-3 demand system," Journal of Public Economics, Elsevier, vol. 58(1), pages 143-158, September.
    7. Martin Browning & Pierre-André Chiappori & Arthur Lewbel, 2013. "Estimating Consumption Economies of Scale, Adult Equivalence Scales, and Household Bargaining Power," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(4), pages 1267-1303.
    8. Echeverría, Lucía & Molina, José Alberto, 2022. "Exploring household heterogeneities of the Deaton-Paxson puzzle: Evidence for Argentina," Nülan. Deposited Documents 3622, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    9. Timothy J. Halliday, 2010. "Mismeasured Household Size and its Implications for the Identification of Economies of Scale," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(2), pages 246-262, April.
    10. John Gibson & Bonggeun Kim, 2018. "Economies of scale, bulk discounts, and liquidity constraints: comparing unit value and transaction level evidence in a poor country," Review of Economics of the Household, Springer, vol. 16(1), pages 21-39, March.
    11. Timothy Halliday, 2006. "Bounding Expected Per Capita Household Consumption in the Presence of Demographic Change," Working Papers 200610, University of Hawaii at Manoa, Department of Economics.
    12. Chen, Shu-Ling & Chern, Wen S. & Lin, Yi-Ru & Liu, Kang Ernest, 2015. "Effects of food safety and health risk information on demand for food in Taiwan," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205452, Agricultural and Applied Economics Association.
    13. François Gardes & Imen Sayadi & Christophe Starzec, 2015. "The full equivalence scales: an estimation integrating the monetary and time dimensions of households’ expenditures [Les échelles d’équivalence complètes : une estimation intégrant les dimensions m," Post-Print hal-01307097, HAL.
    14. Liu, Kang Ernest & Chern, Wen S., 2004. "Translating And Scaling Of Budget Shares: An Empirical Analysis Of Chinese Urban Household Demand For Meat," 2004 Annual meeting, August 1-4, Denver, CO 20001, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    15. Berendeeva, Ekaterina & Ratnikova, Tatiana, 2016. "The Deaton–Paxson paradox in the consumption of Russian households," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 42, pages 54-74.
    16. Chung, Ching-Fan, 2001. "Modelling demand systems with demographic effects based on the modifying function approach," Economics Letters, Elsevier, vol. 73(3), pages 269-274, December.
    17. C. Andrea Bollino & Federico Perali & Nicola Rossi, 2000. "Linear household technologies," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(3), pages 275-287.
    18. Gutierrez, Federico H., 2018. "A Sharing Model of the Household: Explaining the Deaton-Paxson Paradox and Computing Household Indifference Scales," GLO Discussion Paper Series 166, Global Labor Organization (GLO).
    19. Garcia-Diaz Rocio, 2012. "Demand-Based Cost-of-Children Estimates and Child Poverty," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-32, January.
    20. François Gardes & Imen Sayadi & Christophe Starzec, 2015. "The full equivalence scales: an estimation integrating the monetary and time dimensions of households’ expenditures [Les échelles d’équivalence complètes : une estimation intégrant les dimensions m," PSE-Ecole d'économie de Paris (Postprint) hal-01307097, HAL.

    More about this item

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • N3 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ecinqu:v:49:y:2011:i:4:p:1008-1028. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/weaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.