Panel and Pseudo-Panel Estimation of Cross-Sectional and Time Series Elasticities of Food Consumption: The Case of American and Polish Data

François Gardes (1) , Greg Duncan (2) , Patrice Gaubert (3) , Marc Gurgand (4) , Christophe Starzec (5)

1 CERMSEM - CEntre de Recherche en Mathématiques, Statistique et Économie Mathématique
2 Northwestern U.
3 SAMOS - Statistique Appliquée et MOdélisation Stochastique
4 DELTA - Département et Laboratoire d'Economie Théorique et Appliquée
5 TEAM - Théories et Applications en Microéconomie et Macroéconomie

The problem addressed in this article is the bias to income and expenditure elasticities estimated on pseudo-panel data caused by measurement error and unobserved heterogeneity. We gauge empirically these biases by comparing cross-sectional, pseudo-panel and true panel data from both Polish and American expenditure surveys. Our results suggest that unobserved heterogeneity imparts a downward bias to cross-section estimates of income elasticities of at-home food expenditures and an upward bias to estimates of income elasticities of away-from-home food expenditures. "Within" and first-difference estimators suffer less bias, but only if the effects of measurement error are accounted for with instrumental variables.

Mots clés: individual and grouped data; unobserved heterogeneity; AIDS model

Domaines: Economies et finances; Statistiques [math.ST]

François Gardes, Greg Duncan, Patrice Gaubert, Marc Gurgand, Christophe Starzec. Panel and Pseudo-Panel Estimation of Cross-Sectional and Time Series Elasticities of Food Consumption: The Case of American and Polish Data. Journal of business & economic statistics, 2005, 23 (2), pp.242-253. ⟨10.1198/073500104000000587⟩. ⟨hal-00176109⟩