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Consumers usually purchase a huge number of goods and service each year. To manage the high-dimensional choice problem, consumers often allocate income to broad groups before deciding how much to spend on individual items within each group. This is known as two-stage budgeting. This chapter introduces the utility foundations of this approach. This leads to demand equations for groups of goods and services, as well as conditional demands for within-group allocations. The theory is illustrated with an econometric application to the demand for beer, wine, and spirits.

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Group Demand I: Main Results

  • 章节

  • 发表日期：

    2025年

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  • Kenneth W. Clements,
  • Haiyan Liu,
  • Marc Jim M. Mariano,
  • Eliyathamby A. Selvanathan,
  • Saroja Selvanathan,
  • George Verikios

摘要

Consumers usually purchase a huge number of goods and service each year. To manage the high-dimensional choice problem, consumers often allocate income to broad groups before deciding how much to spend on individual items within each group. This is known as two-stage budgeting. This chapter introduces the utility foundations of this approach. This leads to demand equations for groups of goods and services, as well as conditional demands for within-group allocations. The theory is illustrated with an econometric application to the demand for beer, wine, and spirits.