Econometrica Vol. 48 No. 1 1980
The Estimation of the Prais-Houthakker Model of Equivalence Scales
Abstract
Given a preference basis for the model, a household's general equivalence scale is seen to be a cost of living index relative to the reference household type defined at constant prices. A maximum likelihood estimation procedure which can be applied both to cross-section data and pooled time-series/cross-sections is derived. The lack of identification of the model is established theoretically and checked empirically on British family expenditure survey data. With prior information, e.g. a nutrition based food scale, identification can be reached but ultimately the model is rendered implausible because of its zero substitution implication and the empirical results bear this out.
- DOI
- 10.2307/1912023
- Volume
- 48
- Issue
- 1
- Pages
- 153
- Sources
- bibtex:phds-export.bib crossref openalex