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New Zealand Consumption Equivalence Scales From Quasi-unit Record Data

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This paper uses quasi-unit record data on expenditures and incomes of New Zealand households of different demographic profiles to estimate consumption equivalence scales which measure the relative levels of spending required by households of different composition to attain given levels of utility. The equivalence scales with respect to specific items of consumption, as well as total consumption, have been obtained from the parameters of the preference-consistent Extended Linear Expenditure System and a few alternative versions of a rank 3 complete demand system with demand shifters. Among the demographic variables included in the models, the type of housing tenure and the actual age of children have special relevance. For the sake of comparison, a few heuristic scales are also computed. The results are largely in line with those found in similar studies of Australia and New Zealand. The analysis is developed within the framework of hypothesized utility-maximizing behaviour of households.
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Keywords: equivalence scales; quasi-unit record data; rank 3 demand systems.

Document Type: Research Article

Affiliations: Dept of Applied and International Economics, Massey University, New Zealand

Publication date: June 1, 2000

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