Comparing international consumption patterns

When attempting to identify empirical regularities in consumption patterns, their tremendous diversity across countries represents both a major opportunity and challenge. For example, consumers in rich countries devote less than 20% of their budget to food, while this rises to more than 50% in the poorest countries. This paper uses a major new database released in Selvanathan and Selvanathan (Selvanathan EA, Selvanathan S (2003) International Consumption Comparisons: OECD versus LDC. World Scientific, Singapore) to explore several related issues, including the extent to which the consumption basket is diversified and how this changes with income, whether a simple utility-maximising model is capable of explaining the diversity of consumption patterns internationally, the measurement of the extent to which tastes differ across countries, and how the world can be partitioned into groups of countries with minimal within-group heterogeneity of tastes on the basis of the revealed preference of consumers.