The Scope of the Unit Value Problem

This paper investigates the scope of the unit value problem in household level expenditure data. Specifically, to what extent do unit values and prices coincide. I test whether self-reported prices vary with covariates thought to be important in household demand behavior. In addition, I measure the expenditure elasticity of quality for 196 distinct food aggregates. Approximately half of the expenditure elasticities estimated are significantly different from zero, suggesting that unit values and prices do not coincide in most cases. Finally, a generalization of the standard quality demand regression is proposed, in which the expenditure elasticity of quality is allowed to vary over the range of total food expenditure. Some food aggregates display significant nonlinearities, providing further evidence of the difference between prices and unit values.


Issue Date:
2007
Publication Type:
Report
PURL Identifier:
http://purl.umn.edu/6833
Total Pages:
29
Series Statement:
Project Report
CMD 07-06




 Record created 2017-04-01, last modified 2017-08-23

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