| Sumario: | The present work was motivated initially by a desire to devise a better method of estimating the additive quadratic model (AQM) than that used by H.S. Houthakker and L.D. Taylor. In particular, Houthakker and Taylor observed a tendency for the estimated marginal utility of income to decrease sharply at the very end of the sample period, and averred that this probably reflected a defect in the method of estimation However, once the authors began exploring this, it became clear that the defect was in the quadratic utility function itself. Accordingly, they then undertook a critical look at the appropriateness of the AQM as a tool for empirical research, and in so doing decided to do the same with the linear expenditure system (LES). Estimation of both models has proceeded using method II of Houthakker and Taylor, which is the method that they themselves ultimately settled on and which the authors initially sought to supplant. However, once they began considering various alternative methods in detail, it became evident that method II, which in fact is equivalent to method I, except for the first iteration, which probably cannot be improved upon.
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