Engel's approach as a tool for estimating consumer behaviour

Renata Benda-Prokeinová, Kamil Dobeš, Ladislav Mura, Ján Buleca
2017 E & M Ekonomie a Management  
ENGEL'S APPROACH AS A TOOL FOR ESTIMATING CONSUMER BEHAVIOUR Renata Benda-Prokeinová, Kamil Dobeš, Ladislav Mura, Ján Buleca Engel's approach to consumption plays an important role in theoretical economics. There is thus strong empirical and theoretical interest to analyze the cross-section Engel function of real populations. A prerequisite of any economic interpretation is a reasonable estimation of these curves from given cross-section data containing households' expenditures and income. In
more » ... bmitted paper the Engel curves computation was applied on the Slovak household 's income and expenditure. A double-log specifi cation of the Engel's function has been chosen in order to estimate the expenditure elasticity of households by using an economic status of households' head at work for each household by children per person. The household Budget Survey of the Slovak Statistical offi ce was used for the period 2004-2014. Analysis of income elasticity demonstrated negative correlation of food expenditure in Slovak households and the number of children in all food groups of the consumer basket classifi ed as necessary goods. Examination of the households based on the economic activity of their head (employee, self-employed, retired, and others) showed differences in availability of various food groups for the households (inferior, necessary, luxury goods). Increased amount of food groups were included within the luxury category in following order: the households with self-employed head, employed household head, and retirees. Households without children have meat and fats & oils included in the category inferior goods, other types of households according to the number of children considered all types of food in the consumer basket as necessary goods. Results provide deeper knowledge about consumers' behavior of Slovak households.
doi:10.15240/tul/001/2017-2-002 fatcat:fol62fac4rehtm7ry3awxgv63y