Empirical analysis of Australian consumption patterns

Abstract

This paper presents an empirical analysis of Australian private consumption patterns utilising a system-wide approach to analyse how the dominant component, private consumption, is allocated among ten broad groups of consumer goods. Australian consumers, on average, allocate about two-thirds of their income on food, housing, transport and recreation. We considered three demand models, the AIDS, Rotterdam and CBS demand systems, for estimation. The estimated income elasticities reveal that food, alcohol and tobacco, housing and medical care are necessities. All the own-price elasticities are negative and less than one in absolute value (except for recreation), indicating that demand for most goods is price inelastic. In addition, we tested the demand theory hypotheses, homogeneity, Slutsky symmetry and preference independence and found them to be acceptable.

Consumption patterns in Sri Lanka: a decomposition analysis

“…As can be seen, a majority of the points lie above the 45°line indicating that the quantity variance mostly systematically exceeds the price variance. This pattern agrees well with the observation made by Theil and Suhm (1981), Clements (1982Clements ( , 1983, Selvanathan (1993, 1994), Selvanathan and Clements (1995), Selvanathan and Selvanathan (2003), and Wong, Selvanathan, and Selvanathan (2017).…”

“…Table 4 presents the summary of the estimates of income flexibility of eight commodities and that of all commodities combined. As can be seen, all the estimates for ϕ are statistically significant and the estimate of ϕ for all goods combined is −0.69 and the mean value of ϕ is −0.59 are in agreement with a number of previous studies (for example see, Clements and Selvanathan 1994;Selvanathan and Selvanathan 2004;Wong, Selvanathan, and Selvanathan 2017).…”

Modelling Regional Consumption Patterns in Australia*

“…Hence, in the next section we formally test whether consumption patterns are similar across the six states. For Australia as a whole, it is worth noting that the elasticities reported in the last rows of Tables 9 and 10 are broadly similar to those reported by Wong et al (2017) where aggregate-level Australian data are used.…”

“…There may be a possibility that the diverse cultural and religious backgrounds of these migrants could impact the consumption patterns across Australia. If there are consumer behaviour differences amongst the states, and if policymakers use the elasticity estimates presented at the national level, for example, those presented by Wong et al (2017), for policy implementation at the state level, they may not be effective in achieving the desired policy outcomes. Therefore, there is a need to investigate whether there exist disparities between consumers in the various states of Australia.…”

Four Laws of Consumption

“… See Chen (1999),Clements (1982),Clements and Selvanathan (1994),Finke (1985),Meisner (1979),Selvanathan (1993),Selvanathan and Selvanathan (2003),Theil (1967),Theil et al (1981) andWong et al (2017), among others.10 For a further discussion of Giffen goods in theory and practice, seeDougan (1982),Dwyer and Lindsay (1984),Jensen and Miller (2008),Koenker (1977),McDonough and Eisenhauer (1995),Rosen (1999) andStigler (1947).© 2019 Economic Society of Australia…”