IDEAS home Printed from https://ideas.repec.org/a/taf/jdevst/v51y2015i11p1488-1501.html
   My bibliography  Save this article

Preferences, Spatial Prices and Inequality

Author

Listed:
  • Manisha Chakrabarty
  • Amita Majumder
  • Ranjan Ray

Abstract

This study examines the effect of prices on inequality in rural India during the period of economic reforms and beyond (1999/2000-2009/2010). It proposes a framework for calculating 'exact' price indices, based on the 'Exact Affine Stone Index' (EASI) demand system, and shows its usefulness by calculating spatial prices and regionally varying temporal prices that allow for both differences in preferences between states and over time. The study finds that the nature of inflation has been regressive during (1999/2000-2004/2005) and progressive during (2004/2005-2009/2010) and that the effects of temporal price inflation and spatial prices on inequality are qualitatively different.

Suggested Citation

  • Manisha Chakrabarty & Amita Majumder & Ranjan Ray, 2015. "Preferences, Spatial Prices and Inequality," Journal of Development Studies, Taylor & Francis Journals, vol. 51(11), pages 1488-1501, November.
    • Handle: RePEc:taf:jdevst:v:51:y:2015:i:11:p:1488-1501
    DOI: 10.1080/00220388.2015.1028534
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00220388.2015.1028534
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00220388.2015.1028534?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. repec:pri:rpdevs:deaton_tarozzi_prices_poverty is not listed on IDEAS
    2. D. Coondoo & A. Majumder & R. Ray, 2004. "A Method of Calculating Regional Consumer Price Differentials with Illustrative Evidence from India," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 50(1), pages 51-68, March.
    3. Ankita Mishra & Ranjan Ray, 2011. "Prices, Inequality, And Poverty: Methodology And Indian Evidence," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 57(3), pages 428-448, September.
    4. Amita Majumder & Ranjan Ray & Kompal Sinha, 2011. "The Calculation of Rural Urban Food Price Differentials from Unit Values in Household Expenditure Surveys: A new procedure and comparison with existing methods," Monash Economics Working Papers 24-11, Monash University, Department of Economics.
    5. McKelvey, Christopher, 2011. "Price, unit value, and quality demanded," Journal of Development Economics, Elsevier, vol. 95(2), pages 157-169, July.
    6. Linh Vu Hoang, 2009. "Estimation of Food Demand from Household Survey Data in Vietnam," Working Papers 12, Development and Policies Research Center (DEPOCEN), Vietnam.
    7. John Gibson & Scott Rozelle, 2005. "Prices and Unit Values in Poverty Measurement and Tax Reform Analysis," The World Bank Economic Review, World Bank, vol. 19(1), pages 69-97.
    8. Richard Blundell & Ian Preston, 1998. "Consumption Inequality and Income Uncertainty," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(2), pages 603-640.
    9. Amita Majumder & Ranjan Ray & Kompal Sinha, 2012. "Calculating Rural-Urban Food Price Differentials from Unit Values in Household Expenditure Surveys: A Comparison with Existing Methods and A New Procedure," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(5), pages 1218-1235.
    10. Aaron Nicholas & Ranjan Ray & Ma. Rebecca Valenzuela, 2010. "Evaluating the Distributional Implications of Price Movements: Methodology, Application and Australian Evidence," The Economic Record, The Economic Society of Australia, vol. 86(274), pages 352-366, September.
    11. Paul Blacklow & Ranjan Ray, 2000. "A Comparison of Income and Expenditure Inequality Estimates: The Australian Evidence, 1975–76 to 1993–94," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 33(4), pages 317-329, December.
    12. repec:pri:rpdevs:deaton_tarozzi_prices_poverty.pdf is not listed on IDEAS
    13. Abbi Mamo Kedir, 2005. "Estimation of Own- and Cross-price Elasticities using Unit Values: Econometric Issues and Evidence from Urban Ethiopia," Journal of African Economies, Centre for the Study of African Economies, vol. 14(1), pages 1-20, March.
    14. Pendakur, Krishna, 2002. "Taking prices seriously in the measurement of inequality," Journal of Public Economics, Elsevier, vol. 86(1), pages 47-69, October.
    15. Ray, Ranjan, 1985. "Prices, Children and Inequality: Further Evidence for the United Kingdom, 1965-82," Economic Journal, Royal Economic Society, vol. 95(380), pages 1069-1077, December.
    16. Ravallion, Martin & Datt, Gaurav, 2002. "Why has economic growth been more pro-poor in some states of India than others?," Journal of Development Economics, Elsevier, vol. 68(2), pages 381-400, August.
    17. Lipton, Michael & Ravallion, Martin, 1995. "Poverty and policy," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 41, pages 2551-2657, Elsevier.
    18. Arthur Lewbel & Krishna Pendakur, 2009. "Tricks with Hicks: The EASI Demand System," American Economic Review, American Economic Association, vol. 99(3), pages 827-863, June.
    19. Ashok Kotwal & Bharat Ramaswami & Wilima Wadhwa, 2011. "Economic Liberalization and Indian Economic Growth: What's the Evidence?," Journal of Economic Literature, American Economic Association, vol. 49(4), pages 1152-1199, December.
    20. Thomas L. Cox & Michael K. Wohlgenant, 1986. "Prices and Quality Effects in Cross-Sectional Demand Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(4), pages 908-919.
    21. Amita Majumder & Ranjan Ray & Kompal Sinha, 2015. "Estimating Purchasing Power Parities from Household Expenditure Data Using Complete Demand Systems with Application to Living Standards Comparison: India and Vietnam," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(2), pages 302-328, June.
    22. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
    23. Muellbauer, John, 1974. "Prices and Inequality: The United Kingdom Experience," Economic Journal, Royal Economic Society, vol. 84(333), pages 32-55, March.
    24. Mukesh Eswaran & Ashok Kotwal & Bharat Ramaswami & Wilima Wadhwa, 2007. "How does poverty decline? Evidence from India, 1983-1999," Discussion Papers 07-05, Indian Statistical Institute, Delhi.
    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. Weinand, Sebastian & von Auer, Ludwig, 2019. "Anatomy of regional price differentials: Evidence from micro price data," Discussion Papers 04/2019, Deutsche Bundesbank.
    2. Marek ediv & Petr Jansk, 2018. "How Do Regional Price Levels Affect Income Inequality? Household-level Evidence From 21 Countries," LIS Working papers 752, LIS Cross-National Data Center in Luxembourg.
    3. Abhimanyu Dadu & Namrata Gulati, 2014. "Inequality, neighborhoods and variation in prices," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2014-001, Indira Gandhi Institute of Development Research, Mumbai, India.
    4. Sebastian Weinand & Ludwig von Auer, 2019. "Anatomy of Regional Price Differentials: Evidence From Micro Price Data," RatSWD Working Papers 268, German Data Forum (RatSWD).
    5. Namrata Gulati & Abhimanyu Dadu, 2014. "Inequality, Neighbourhoods and Variation in Prices," Economics Bulletin, AccessEcon, vol. 34(3), pages 1463-1484.
    6. Manisha Chakrabarty & Amita Majumder & Ranjan Ray, 2018. "A Framework for the Simultaneous Measurement of Spatial Variation and Temporal Movement in Prices in a Heterogeneous Country: The Dynamic Household Regional Product Dummy Model," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(3), pages 703-730, September.
    7. Sebastian Weinand & Ludwig von Auer, 2019. "Anatomy of Regional Price Differentials: Evidence From Micro Price Data," Research Papers in Economics 2019-03, University of Trier, Department of Economics.

    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. Ranjan Ray, 2017. "The Role of Prices in Welfare Comparisons: Methodological Developments and a Selective Survey of the Empirical Literature," The Economic Record, The Economic Society of Australia, vol. 93(301), pages 314-332, June.
    2. Amita Majumder & Ranjan Ray & Sattwick Santra, 2019. "The Calculation of Spatial Prices in the Absence of Unit Values: Alternative Methodologies with Empirical Evidence from India," Monash Economics Working Papers 12-18, Monash University, Department of Economics.
    3. Amita Majumder & Ranjan Ray & Kompal Sinha, 2014. "A Unified Framework for the Estimation of Intra and Inter Country Food Purchasing Power Parities with Application to Cross Country Comparisons of Food Expenditure: India, Indonesia and Vietnam," Monash Economics Working Papers 31-14, Monash University, Department of Economics.
    4. Amita Majumder & Ranjan Ray, 2020. "National and subnational purchasing power parity: a review," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 47(2), pages 103-124, June.
    5. Aaron Nicholas & Ranjan Ray & Ma. Rebecca Valenzuela, 2010. "Evaluating the Distributional Implications of Price Movements: Methodology, Application and Australian Evidence," The Economic Record, The Economic Society of Australia, vol. 86(274), pages 352-366, September.
    6. Amita Majumder & Ranjan Ray & Kompal Sinha, 2015. "Estimating Purchasing Power Parities from Household Expenditure Data Using Complete Demand Systems with Application to Living Standards Comparison: India and Vietnam," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(2), pages 302-328, June.
    7. Amita Majumder & Ranjan Ray, 2015. "Estimates of Spatial Prices in India and their Sensitivity to Alternative Estimation Methods and Choice of Items," Monash Economics Working Papers 11-15, Monash University, Department of Economics.
    8. Almås, Ingvild & Kjelsrud, Anders, 2017. "Rags and Riches: Relative Prices, Non-Homothetic Preferences, and Inequality in India," World Development, Elsevier, vol. 97(C), pages 102-121.
    9. Paul Blacklow & Aaron Nicholas & Ranjan Ray, 2010. "Demographic Demand Systems With Application To Equivalence Scales Estimation And Inequality Analysis: The Australian Evidence," Australian Economic Papers, Wiley Blackwell, vol. 49(3), pages 161-179, September.
    10. Majumder, Amita & Ray, Ranjan & Sinha, Kompal, 2015. "Spatial Comparisons Of Prices And Expenditure In A Heterogeneous Country: Methodology With Application To India," Macroeconomic Dynamics, Cambridge University Press, vol. 19(5), pages 931-989, July.
    11. Manisha Chakrabarty & Amita Majumder & Ranjan Ray, 2018. "A Framework for the Simultaneous Measurement of Spatial Variation and Temporal Movement in Prices in a Heterogeneous Country: The Dynamic Household Regional Product Dummy Model," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(3), pages 703-730, September.
    12. Hoa K. Hoang, 2018. "Analysis of food demand in Vietnam and short†term impacts of market shocks on quantity and calorie consumption," Agricultural Economics, International Association of Agricultural Economists, vol. 49(1), pages 83-95, January.
    13. Martina Menon & Federico Perali & Ranjan Ray & Nicola Tommasi, 2019. "The Tale of the Two Italies: Regional Price Parities Accounting for Differences in the Quality of Services," Working Papers 20/2019, University of Verona, Department of Economics.
    14. Amita Majumder & Ranjan Ray & Kompal Sinha, 2011. "Estimating Intra Country and Cross Country Purchasing Power Parities from Household Expenditure Data Using Single Equation and Complete Demand Systems Approach: India and Vietnam," Monash Economics Working Papers 34-11, Monash University, Department of Economics.
    15. de Ree, Joppe & Alessie, Rob & Pradhan, Menno, 2013. "The price and utility dependence of equivalence scales: Evidence from Indonesia," Journal of Public Economics, Elsevier, vol. 97(C), pages 272-281.
    16. Menggen Chen & Yan Wang & D. S. Prasada Rao, 2020. "Measuring the spatial price differences in China with regional price parity methods," The World Economy, Wiley Blackwell, vol. 43(4), pages 1103-1146, April.
    17. Ingvild Almas, 2012. "International Income Inequality: Measuring PPP Bias by Estimating Engel Curves for Food," American Economic Review, American Economic Association, vol. 102(2), pages 1093-1117, April.
    18. Krishna Pendakur & Stefan Sperlich, 2010. "Semiparametric estimation of consumer demand systems in real expenditure," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 25(3), pages 420-457.
    19. Amita Majumder & Ranjan Ray & Kompal Sinha, 2011. "The Calculation of Rural Urban Food Price Differentials from Unit Values in Household Expenditure Surveys: A new procedure and comparison with existing methods," Monash Economics Working Papers 24-11, Monash University, Department of Economics.
    20. Andalón, Mabel & Gibson, John, 2018. "The ‘soda tax’ is unlikely to make Mexicans lighter or healthier: New evidence on biases in elasticities of demand for soda," MPRA Paper 86370, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

    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:taf:jdevst:v:51:y:2015:i:11:p:1488-1501. 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/FJDS20 .

    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.