Economies of Scale in the Household: Puzzles and Patterns From the American Past

Abstract

Estimates of household economies of scale are critical for measuring income and living standards, yet we know little about how these scale economies change over time. I use American household expenditure surveys to produce the first comparable historical estimates of household scale economies. I find that scale economies changed significantly from 1888 to 1935 for all expenditure categories considered (food, clothing, entertainment, and housing), but not all trends in scale economies are consistent with theoretical predictions. As such, our notions about household economies of scale must be reassessed in light of this historical evidence. (JEL D1, E3, I3, J1, N3)

Families as roommates: Changes in U.S. household size from 1850 to 2000

“…We do so because Deaton and Paxson (1998) and several subsequent papers found that food consumed at home has public good characteristics (Gan and Vernon (2003), Deaton and Paxson (2003)). This finding seems to apply to historical and recent data on expenditure patterns (Logan (2010)). In particular, larger households spend less per capita on food when total expenditures are kept constant.…”

“…We do so because Deaton and Paxson (1998) and several subsequent papers found that food consumed at home has public good characteristics (Gan and Vernon (2003), Deaton and Paxson (2003)). This finding seems to apply to historical and recent data on expenditure patterns (Logan (2010)). 9 For example, while toothbrushes could, in principle, be shared, most people do not share them for hygienic reasons; a bed could, in principle, be shared, however, most people do not take turns using a bed since they would need it at the same time; clothing could, in principle, be shared, however, this is unlikely to be practical because of fit.…”

Families as Roommates: Changes in U.S. Household Size from 1850 to 2000

“…We do so because Angus Deaton & Christina Paxson (1998) and several subsequent papers find that food consumed at home has public good characteristics (Li Gan & Victoria Vernon 2003, Angus Deaton & Christina Paxson 2003. This finding seems to apply to historical and recent data on expenditure patterns (Trevon D. Logan 2007). In particular, larger households spend less per capita on food when total expenditures are kept constant.…”

Caloric Requirements and Food Consumption Patterns of the Poor

“…As households become richer, we expect them to spend a lower share of their budgets on food, to consume more calories (up to satiation), and to consume more expensive types of food. Recent work in the literature has focused on using food consumption patterns to measure inflation (Costa (2001), Hamilton (2001)), international pricedifferences (Almas (2012)), and hunger (Logan (2009), Jensen and Miller (2010)) 1 . The cost of buying a set number of calories (and other nutrients) has also been used to construct absolute poverty lines used to measure progress in poverty reduction and as eligibility thresholds for government assistance.…”