The Impact of Macro Socio-Economic Drivers and Fiscal Policy on Expenditure Allocation and Attribute Preferences

Our article investigates the effect of macro socio-economic drivers on Australian households’ allocation of expenditure in a category (household appliances) and conditional on the allocated category expenditure, preferences for products (clothes washers) within the category. At the category-level, we quantify the effect of changes in social mobility, disposable income, housing prices and the 2009 stimulus payments on purchase propensity and expenditure. At the product-level, we investigate how households trade off between price, energy efficiency and loading capacity conditional on allocated category expenditure, measuring nonhomotheticity in preferences. We use the model to study a number of hypothetical scenarios, where we simulate the effect of changes in macro socio-economic drivers and fiscal policies on market structure and revenue