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MEASURING THE DIVERSITY OF HOUSEHOLD SPENDING PATTERNS
Author(s) -
Chai Andreas,
Rohde Nicholas,
Silber Jacques
Publication year - 2015
Publication title -
journal of economic surveys
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.657
H-Index - 92
eISSN - 1467-6419
pISSN - 0950-0804
DOI - 10.1111/joes.12066
Subject(s) - economics , diversification (marketing strategy) , diversity (politics) , goods and services , consumer spending , generalized entropy index , econometrics , public economics , macroeconomics , panel data , economy , business , sociology , marketing , recession , anthropology
Abstract Households tend to diversify their spending across a wide range of goods and services as they become more affluent. Recently, there has been growing interest in understanding the precise manner in which this spending diversification process takes place. We review what facts are known about this process and the underlying behavioural tendencies that are thought to drive it. In addition, we clarify the relationship between different approaches to measuring the level of spending diversity. A number of indices are employed, including measures based on joint probabilities, distances and the concept of entropy. Using UK household spending data, we show the extent to which these measures deliver different results and shed light on the nature of behavioural heterogeneity.