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Documentation

Scope

This data set contains estimates of total and marginal budget shares and income and price elasticities for nine broad consumption groups and eight food subgroups across 144 countries. Total and marginal budget shares and income and price elasticities are estimated using 2005 International Comparison Program (ICP) data, which is maintained by the ICP Development Data Group of the World Bank. Countries are listed by per capita income which is reported in the marginal share files. Similar estimates based on 1996 ICP data, which also includes cross-price elasticities are available in a zip file.

Product Coverage

Broad consumption categories
   

  • Food, which includes food prepared and consumed at home, food away from home, and beverages and tobacco
  • Clothing and footwear   
  • Education
  • Housing
  • House furnishings and operations
  • Medical care
  • Transportation and communications
  • Recreation
  • Other expenditures


Food subcategories

  • Bread and cereals
  • Meat
  • Fish
  • Dairy products
  • Fruits and vegetables
  • Oils and fats
  • Beverages and tobacco
  • Other food products

Country Coverage

For the 2005 ICP data round, participant countries are divided into six regions: five geographic regions-Africa (48 countries included), Asia Pacific (23 countries), West Asia (11 countries), South America (10 countries), and the CIS (10 countries)-and the OECD and other European countries, plus Israel and Russia (46 countries). Egypt appears in both the African and the West Asian regions, and Russia appears in both the OECD/Europe and CIS regions. See International Evidence on Food Consumption Patterns: An Update Using 2005 International Comparison Program Data for the complete list of countries.

Estimation Procedure

The analysis uses a two-stage demand system. In the first stage, consumers are assumed to make budget choices over broad consumption groups. Given the budget endowment for each broad consumption group, in the second stage consumers make budget choices for consumption items within each group. In using this approach, we maintain preference independence within the broad groups. In the second stage, weak separability among items within a broad group is assumed.

The Florida model, a modified Working's model that incorporates price terms, is fit to the first-stage model for nine broad groups of goods across 144 countries. Although ICP data cover 146 countries, Greece was not available at the basic heading level and Comoros was excluded from the analysis due to data concerns. This model assumes preference independence. A modified version of the Florida model, the Florida Slutsky model, which assumes weak separability, is fit to the eight food subgroups. The country data exhibit group heteroskedasticity. A maximum likelihood procedure that corrects for group heteroskedasticity is developed and used to estimate the model. Outliers are identified with information inaccuracy measures, and Strobel measures of goodness-of-fit are calculated.

The parameters estimated in the first stage of the analysis are used to calculate elasticities for the broad consumption groups, and the parameters estimated in the second stage are used to calculate the conditional elasticities for the food subgroups. The unconditional elasticities for the food subgroups are then calculated using the conditional elasticities and the elasticities for food estimated in the first stage of the estimation process.

For additional information and references, see International Evidence on Food Consumption PatternsCross-Price Elasticities of Demand Across 114 Countries, and International Evidence on Food Consumption Patterns: An Update Using 2005 International Comparison Program Data.

International Comparison Program

The ICP was initiated in 1975 by researchers at the University of Pennsylvania and is maintained by the ICP Development Data Group of the World Bank. Over the years, data collected by the ICP have increased from 10 countries in Phase I (1970) to 146 countries in 2005. ERS estimates are based on the latest ICP data (2005). The 146 economies covered by the data account for more than 95 percent of the world's population and 98 percent of the world's nominal GDP. Most of the countries included for the first time in this round are low-income countries in Africa. The number of African countries included more than doubled from 22 in 1996 to 48 in 2005. Several Asian countries were newly included, most notably China and India. In South America, Colombia was added and 12 Caribbean countries were excluded. The Commonwealth of Independent States (CIS) no longer covers Turkmenistan and Uzbekistan, so these countries were dropped from the 2005 data set. In West Asia, Iraq and Kuwait were added, and in the OECD/Europe and other countries group, Cyprus, Malta, Croatia, Bosnia and Herzegovina, Montenegro, and Serbia were included for the first time.

In earlier rounds, one product list was used for all countries covered, and prices for these products needed to be collected. However, consumption varies sufficiently across regions, making such a common product list impractical. For the 2005 round, each of the regions developed its own product list and determined its purchasing power parity and volume shares independently. Later, the regional results were linked to a global world comparison model that left the regional relative parities intact.

Data Items

Budget share: measures the share of total income spent on a product category.

Marginal share: measures the share of a $1 increase in income spent on a product category.

Income elasticity: measures the percentage change in real spending on a product category given a 1% change in income.

Own-price elasticity: measures the percentage change in real spending on a product category given a 1% change in the price of that category.

Source Reports

Additional References

Seale, James L., and Anita Regmi. 2006. "Modeling International Consumption Patterns," Review of Income and Wealth, Vol. 52(4), pp. 603-24.

Theil, H., C.F. Chung, and J.L. Seale, Jr. 1989. International Evidence on Consumption Patterns. Greenwich, CT: JAI Press, Inc.

Working, H. 1943. "Statistical Laws of Family Expenditure," Journal of the American Statistical Association, Vol. 38, pp. 43-56.

World Bank, 2008. "Global Purchasing Power Parities and Real Expenditures, 2005 International Comparison Program." Washington, DC.

Last updated: Thursday, July 05, 2012

For more information contact: Andrew Muhammad