Universal Asset Preferences: An Empirical Study on Durable Preferences for Households Throughout the Developing World
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2021-07-21
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en
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Abstract
Research indicates a universal preference for durable goods to be present within a variety of countries. Nevertheless, the universality of preferences for durable goods throughout the developing world remains a poorly studied and understood subject. We study the universality and the rationality of durable preferences for households throughout the developing world. We use logistic regression analyses to estimate ownership probabilities for a selection of four durables, which we utilize to construct patterns of durable acquisition for average households. Results indicate that household preferences for durable goods are neither universal, nor rational throughout the countries of the developing world. Yet, preferences for durable goods likely are universal within specific regions, such as Sub-Saharan Africa. Nevertheless, differences in access to electricity, the relative household position of women, urban or rural residence, complementarities and a set of country-specific factors yield varying – and irrational – patterns of durable acquisition and preferences among households throughout the developing world. Our findings indicate that when designing developmental policies for the developing world it is of importance to account for the differences in durable preferences among households. Moreover, in order to guarantee efficient patterns of development, policy makers should eradicate irrational tendencies in the acquisition of durables by households.
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Faculteit der Managementwetenschappen