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A Nonlinear Expenditure System Using a Linear Logit Specification
Author(s) -
Tyrrell Timothy,
Mount Timothy
Publication year - 1982
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1240646
Subject(s) - engel curve , logit , econometrics , homogeneity (statistics) , nonlinear system , constraint (computer aided design) , economics , budget constraint , mathematics , flexibility (engineering) , transformation (genetics) , logistic regression , linear regression , additive model , nonlinear regression , statistics , regression analysis , microeconomics , biochemistry , physics , geometry , chemistry , quantum mechanics , price index , gene
Recent literature on the estimation of models of consumer expenditure patterns indicates that Engel curves are nonlinear and demographic variables are important determinants of demand. A linear logit household expenditures model is presented which automatically displays “adding up” properties derived from the budget constraint while permitting great flexibility in the Engel curves. In addition, homogeneity and symmetry can be imposed and tested, and by a simple transformation the coefficients can be estimated by linear regression. Another advantage of the model is that demographic variables, such as household size and composition, can be introduced without sacrificing the “adding up” properties.