Estimate of the utility function of the Ecuadorian consumer in 2012
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Abstract
This article generates three consumer utility functions at the national, urban and rural level based on a Cobb-Douglas type utility function and data from the National Survey of Income and Expenditures of Urban and Rural Households 2011-2012, each with twelve goods; exponents represent the proportion of the expenditure of each good regarding the total expense. Consumers in Ecuador spend half on food and non-alcoholic beverages, transport and other goods and services. Spending on food in urban and rural areas is 23 percent and 32 percent, respectively. The decile I allocate 60 percent of its income to satisfy these needs, while the decile X uses between 41 and 50 percent of its resources, depending on whether they inhabit urban or rural areas, respectively. The consumer utility functions can be used to analyze the effects of the application of public policies such as the establishment of controlled prices, subsidies or tax changes.
DOI: https://doi.org/10.31164/bcoyu.16.2018.658
URL: http://revistas.uta.edu.ec/erevista/index.php/bcoyu/article/view/658
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