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Luxury or Necessary Goods?: Analysis of Household Demand for Communication and IT Products in OECD Countries

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  • Yanbin Tu

    (Robert Morris University, Pittsburgh, USA)

Abstract

This paper analyzes the income elasticity of household demand for communication and IT products in 23 Organization for Economic Co-operation and Development (OECD) countries during the period from 2008 to 2015. By using panel data analysis, the authors find that both communication and IT products are necessary to the households in the OECD countries as a whole. By using OLS and GLS regression for each country, they compare the change of each one's income elasticity over two periods during 1989 to 2015. The authors find that communication and IT products were considered luxury goods by the households in these countries from 1989 to 2001. However, from 2008 to 2015 such products were considered necessary, luxury, or inferior goods separately by the households in various OECD countries. The trend is that the income elasticity is decreasing, and households in some OECD countries start to take such products as necessary goods. Both panel analysis and regression results suggest that most of households take communication and IT products as necessary.

Suggested Citation

  • Yanbin Tu, 2020. "Luxury or Necessary Goods?: Analysis of Household Demand for Communication and IT Products in OECD Countries," International Journal of Business Analytics (IJBAN), IGI Global, vol. 7(3), pages 30-43, July.
    • Handle: RePEc:igg:jban00:v:7:y:2020:i:3:p:30-43
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