ECONOMIES OF SCALE, HOUSEHOLD SIZE, AND THE DEMAND FOR FOOD: THE MISSING LINK
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For the same level of per capita resources, larger households are deemed better off due to possible scale economies from consuming household public goods. Contradictory evidence that per capita demand for food declines with household size has puzzled economists. This paper suggests that larger households have costs associated with sharing food, especially high-value foods, and so they substitute towards cheaper and basic foods, whose per capita demand increases with household size. However, since high-value foods form a larger proportion of the budget on all foods, per capita demand for all foods declines with household size when Engel food-share equation is estimated using aggregate food expenditure data.