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This is a Quantitative Study study.

September 12, 2025

Experienced Utility, Engel Curves and Expenditure Choices

Key Points

Distinct experienced utility functions characterize individual spending behaviors, influencing different goods' categories and durability.
Findings suggest a strong association between conspicuous consumption, social aspects of life, and individual well-being.
Engel curves estimated using a non-parametric instrumental variable approach indicate varying expenditure patterns across utility levels.
Data from Italian residents in 2016 highlights the relationship between subjective well-being and spending choices.

Abstract

Abstract This study examines how individual spending behaviours change for different levels of experienced utility using a composite SWB indicator as a utility proxy and modelling expenditure behaviours through Engel curves across different utility regions. To perform the analysis, we use expenditure and SWB data for Italian residents in 2016 and estimate Engel curves through a non-parametric instrumental variable threshold regression approach. Our findings indicate that individual spending behaviours are characterized by distinct experienced utility functions, with respect to different goods' categories and durability, and corroborate the strict association between conspicuous consumption, social aspects of life, and well-being.

Experienced Utility, Engel Curves and Expenditure Choices

Key Points

Abstract

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