Testing Household Economies of Scale in Uzbekistan

Abstract

This paper investigates empirically the relationship between household economies of scale and consumption in Uzbekistan. Particular attention is paid to the so-called “zero consumption problem” and Tobit estimator is utilized to deal with the problem. Using the household survey dataset made available recently, we test presence (or lack) of household economies of scale in seven different consumption categories (food, meals out, clothing, education, health, transportation and shelter). We find evidence of strong and positive household economies of scale in consumption of meals out, clothing, education, health, transportation and shelter, while consumption of food fails to indicate this pattern. We also estimate food Engel curve using non-parametric kernel estimates and fail to find the existence of household economies of scale through food consumption data.

Keywords

• Household economies of scale
• Engel curve
• Tobit