Consumption in colonial Mexico: measuring degree of subsistence

Abstract

What does individual’s consumption in colonial Mexico says about the conditions they lived in? The elasticity of substitution between a series of good tells us about the way individuals perceived goods. This measure can determine the degree of subsistence that individuals faced. Using a structural dynamic model in which the production factors are labor and climatic conditions I estimate the elasticity of substitution for wheat, maize and bean. The results determine that individuals in colonial Mexico chose its consumption based on preferences instead of necessity.