Demographic variables in demand systems: The case for generality

Abstract

This paper provides evidence in favour of greater generality in the demographic demand literature. We propose two demographic demand procedures. One extends the Gorman model by allowing non additive interaction between ‘overheads’ and ‘Barten scaling’. The other extends ‘Price Scaling’, by allowing the equivalence scale to vary with utility, and offers a test of ‘Equivalence Scale Exactness’ (ESE). The rejection of ESE is robust to the assumed demand functional forms (RNLPS, QAIDS), to items chosen, and the estimation method (MLE, GMM). The results show that published cell averages yield well determined estimates of the demographic generalisation parameters.