Infrequency of Purchase: A Model for Clothing Consumption with Panel Data

Abstract

Microeconomic survey data sets offer important advantages for the analysis of consumer demand, although one of the problems associated with these data is the existence of zeros in the expenditure records of households. One of the reasons behind a zero record is infrequency of purchase. This paper focuses on the analysis of infrequency of Purchase Models (IPMs). We develop an IPM for panel data and compare it with the IPM for cross-sectional data. The estimation of these models using panel data might shed some light on the restrictions that one has to make in order to estimate them using cross-sectional data. Finally, we test for individual heterogeneity and compare the two sets of estimation results. The data are drawn from the "Spanish Family Expenditure Survey" (ECPF) for the period 1985 to 1991.