U.S. Income Distribution and Gorman Engel Curves for Food

Abstract

A method for nesting, estimating and testing for the rank and functional form of the income terms in an incomplete system of aggregable and integrable demand equations is derived. Information theory is applied to the problem of inferring the U.S. income distribution using annual time series data on quintile and top five percentile income ranges and intra-quintile and top five percentile mean incomes. Estimates for the year-to-year income distribution are combined with annual time series data on the U.S. consumption of and retail prices for twenty-one food items to estimate the rank and functional form of the income terms in U.S. food demand over the period 1919-95, excluding 1942-46 to allow for the structural impacts of World War II.