A QUAIDS Model of Need-Based Structure in U.S. Personal Consumption 2006–2012

Structure in personal consumption is conceptualized as arising from need-based consumer objectives in the use of goods and services and the organization in consumer heuristics that these objectives imply. As used here, structure is taken to suggest that goods are grouped together in consumer heuristics on criteria not exclusively predicted by their physical properties. A need-based structure in personal consumption is tested in the complementarity and substitution between goods evidenced in the Consumer Expenditure Survey (CEX). The historical two category discrimination in essentials and non-essentials is extended to represent a category of semi-essentials in which goods have both function and signal with approximately equivalent weights. Results from estimation of a Quadratic Almost Ideal Demand System over a study period following a structural break in the complete data series generally support the proposed structural differentiation of consumption goods and services.