Bias in Income Elasticity Estimates Derived from Expenditure per Family Data-A Note

In calculating the income elasticities one often faces the problem of effects of family size on the consumption of various commodities. It is generally recognised that these effects are different on different commodities. Messrs Houthakker H, S. and Prais J. S., have stated that an increase in the household size increases the household consumption of necessary and inferior goods at the cost of luxury articles, and decreases the per capita consumption of both necessaries and luxuring while increasing the per capita expenditure on the inferior commodities.