1 CHILDREN AS CONSUMERS: INVESTIGATING CHILD DIARY EXPENDITURE DATA Lisa Farrell* and Michael A. Shields *School of Economics, University College Dublin, Ireland ** Department of Economics, University of Melbourne, Australia We are grateful to the Data Archive, University of Essex, for supplying the Family Expenditure Survey data. UCD Geary Institute Research, Analysis, Evidence

2 The Child as a consumer why do we care? Small component of national income – but a substantial proportion of the demand for certain industries Adult expenditure patterns may be effected by expenditure as a child Interaction with household expenditure Welfare implications for children

3 Our Focus Determinants of child expenditure patterns –Child income –Child characteristics –Parent and sibling characteristics –Household characteristics –Household expenditure patterns

4 The data FES % response rate 1789 children Aged 7-15 Average weekly expenditure £11.14

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7 What do they buy?

8 The model- what they buy Multivariate Probit Model –E is a 0/1 indicator

9 The model- how much they buy Budget share equations for commodity i for child j Almost Ideal Demand System (AIDS)

10 Results discussed- what they buy Older children buy less child-orientated commodities, such as toys. Boys have a lower probability of buying clothes and books than girls. Lone parent children have a higher probability of buying vice type products and are more likely to buy travel products. Children from wealthy households also have a higher probability of consuming vice products

11 Results- how much they buy The effect of income

12 Results- how much they buy The effect of household provision

13 Results discussed- how much they buy The effect of income –drinks, sweets, books, toys are normal goods –clothes, travel and vice are luxury goods The effect of household provision –Higher parental budget share= higher child budget share Suggesting intergenerational transfer of preferences

14 Conclusion A first attempt to understand children as consumers…some data issues –Child income data is poor (under-recorded relative to expenditure) –Child work info is poor- paper rounds etc. –Better breakdown for high technology products purchase of music from the internet and mobile phone credit etc.