Household consumer behaviour and welfare in Hungary since the change of system
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The outcome of the economic performance of individuals takes the form of consumption and consequent welfare. Despite this truism, there is relatively little economics-founded information available on household consumption habits in Hungary. The study sets out to fill the gap with an estimate based on the now-basic spending model. The authors apply the results of the estimate to verifying the robustness of the theoretical economic assumptions and then show how this theoretical framework can be used to quantify the effects of price changes. Within limits, the model proves applicable to the situation in Hungary. The results are comparable to those in international literature. The most instructive finding in practice is the one obtained from the examination of welfare; the model can correct significantly the results obtainable from a naive estimate of price changes that ignores adjustment by consumers. It can be concluded from the consumer-unit calculations that applying in Hungary the internationally customary equivalence scales may lead to overestimation of the relative income position of families with children, especially those with several children.
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