Abstract:
This study investigates the moderating role of household structure on consumption decisions and the dynamics of expenditure elasticity for leisure and sporting goods along the income curve for different household types. Using microdata from the German Income and Consumption Survey (EVS), we employ an extended econometric approach featuring a log-log specification with a quadratic income term to capture non-linearity and interaction terms to model elasticity heterogeneity for different household configurations. While OLS is used for general leisure, advanced censored-data models (Tobit, Heckman, and Hurdle specifications) are applied to sporting goods demand to separate the consumption propensity from the intensity. We confirm significant non-linear demand dynamics for both leisure and sporting goods consumption, characterized by substantially higher expenditure elasticities in lower income brackets that subsequently flatten out with rising income. We find strong household heterogeneity: the most pronounced income effect is observed in households with children, who demonstrate the strongest reaction to additional income in the lower part of the income spectrum for leisure and sporting goods expenditures. This refined approach delivers a significantly improved explanatory power for the variance in leisure and sporting goods demand modelling.
