Price sensitivity as a measure of living standards in late-colonial Mexico City1741-1812
- Luz Marina Arias 1
- Alexander Dentler 1
- 1 Centro de Investigación y Docencia Economómicas (CIDE), Mexico City
ISSN: 1698-6989
Any de publicació: 2023
Títol de l'exemplar: Living standards from a historical perspective
Volum: 19
Número: 2
Pàgines: 49-69
Tipus: Article
Altres publicacions en: Investigaciones de Historia Económica = Economic History Research
Resum
We exploit crop price data and seasonal climatic conditions, measured by tree-ring growth, to analyze food consumption in the last decades of colonial rule. We estimate the elasticity of substitution between wheat and maize —a measurement of price sensitivity that provides a demand-based approximation to living standards. The estimates place household expenditures between the two alternatives found in the literature: the Laspeyres (or fixed) basket and the least-costly (or “cheap”) basket, albeit the estimates are closer to the latter. A fixed basket would require a household to spend on average 29% more than a “cheap” basket; the average excess expenditure for our estimates is close to 2%. The results confirm the decreasing trend on living standards in the literature, and highlight the importance of household optimizing behavior in the assessment of living standards: economic pressure and necessity elicit adaptation.
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