Over much of the past 25 years, the cycles of house price and consumption growth have been closely synchronised. Three main hypotheses for this co-movement have been proposed in the literature. First, that an increase in house prices raises households' wealth, particularly for those in a position to trade down the housing ladder, which increases their desired level of expenditure. Second, that house price growth increases the collateral available to homeowners, reducing credit constraints and thereby facilitating higher consumption. And third, that house prices and consumption have tended to be influenced by common factors. This paper finds that the relationship between house prices and consumption is stronger for younger than older households, which appears to contradict the wealth channel. These findings therefore suggest that common causality has been the most important factor behind the link between house price and consumption.

Government transfers to individuals are often given labels indicating that they are designed to support the consumption of particular goods. Standard economic theory implies that the labeling of cash transfers or cash-equivalents should have no effect on spending patterns. We study the UK Winter Fuel Payment, a cash transfer to older households. Our empirical strategy nests a regression discontinuity design with an Engel curve framework. We find robust evidence of a behavioral effect of labeling. On average households spend 47% of the WFP on fuel. If the payment were treated as cash, we would expect households to spend 3% of the payment on fuel.

Characteristics models have been found to be useful in many areas of economics. However, their empirical implementation tends to rely heavily on functional form assumptions. In this paper we develop a revealed preference approach to characteristics models. We derive the necessary and sufficient empirical conditions under which data on the market behaviour of heterogeneous, price-taking consumers are non-parametrically consistent with the consumer characteristics model. Where these conditions hold, we show how information may be recovered on individual consumers' marginal valuations of product attributes. In some cases, marginal valuations are point identified, and in other cases, we can only recover bounds. Where the conditions fail, we highlight the role which the introduction of unobserved product attributes can play in rationalizing the data. We implement these ideas using consumer panel data on the Danish milk market. Copyright 2008 The Review of Economic Studies Limited.

This paper is concerned with the extent to which household expenditure patterns are affected by Child Benefit (CB), a transfer payment that depends on the number of children in the household. Despite the fact that CB is cash, we find that it is spent differently than other income -not on child assignable goods, but disproportionately on alcohol. We find, surprisingly, that this effect is much larger for couples that for lone mothers but this would be consistent with the idea that parents free-ride when it comes to child quality investment. Thus, our evidence suggests that the answer to our question is that -it is parents who benefit from CB. This would be consistent with two extreme views: parents place little weight on the welfare of their children; or parents place so much weight that they fully insure their children against shocks. We decompose CB variation into anticipated (inflation driven) variation, and (reform driven) surprises. We find that the alcohol spending result is driven by surprises -consistent with the view that parents are altruistic towards their children.

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractWe merge detailed household level expenditure data from older households with historical local weather information.We then test for a heat or eat trade o: do households cut back on food spending to nance the additional cost of keeping warm during cold shocks? For households who cannot smooth consumption over time, cold weather shocks are equivalent to income shocks. We nd evidence that the poorest of older households are unable to smooth spending over the worst temperature shocks. Statistically signicant reductions in food spending are observed in response to winter temperatures two or more standard deviations colder than expected (which occur about one winter month in forty) and reductions in food expenditure are considerably larger in poorer households.