Lithuania's food demand during economic transition

The linear approximate version of the almost ideal demand system (LA‐AIDS) model is estimated using data from the Lithuanian household budget survey (HBS) covering the period from July 1992 to December 1994. Price and real expenditure elasticities for 12 food groups were estimated based on the estimated coefficients of the model. Very little or nothing is known about the demand parameters of Lithuania and other former socialist countries, so the results are of intrinsic interest. Estimated expenditure elasticities were positive and statistically significant for all food groups, while all own‐price elasticities were negative and statistically significant, except for that of eggs which was insignificant. Results suggest that Lithuanian household consumption did respond to price and real income changes during their transition to a market‐oriented economy.     

Food Import Demand in the Czech Republic

This paper provides an overview of Czech food import demand in the transition period of the 1990s. It provides econometric estimates of own‐ and cross‐price elasticities as well as group expenditure elasticities of Czech import demand for sixteen lower level and four upper level food groups. Based on the Hausman test for endogeneity, which supported the hypothesis that Czech import prices were exogenously determined outside of the Czech economy, we estimated five demand models as direct‐demand systems of the AIDS type. The econometric estimation of elasticities used bimonthly data from March 1993 to August 1997.     

Demand for meat and dairy products by Turkish households: a Bayesian censored system approach

We extend the Tobit (censored) linear equation system procedure to utility‐theoretic demand functions, along with a mapping mechanism to impose the adding‐up restriction implied by consumer utility maximization theory—a theoretical restriction very often ignored in previous empirical studies with censored demand systems. In this context, the Bayesian Markov Chain Monte Carlo (MCMC) procedure is applied to the censored linear approximate almost ideal demand system (LAIDS) for 12 food products, using data from the Turkish Household Expenditure Survey. All own‐price elasticities are negative and expenditure elasticities positive. Uncompensated own‐price elasticities for rural households are generally much higher than those for their urban peers, though demand for most food products are own‐price elastic for both types of households. The differential patterns in demand elasticities between urban and rural households become even more evident (almost twice) as relatively more expensive foodstuffs are consumed, showing that accessibilities to alternative products have made rural Turkish households more cognizant toward price changes in foods. Household characteristics play a key role in food expenditures, notably so in urban areas, and regional and seasonal differences are also present.     

Disaggregating the Demand for Pesticides: Does it Matter?

This paper analyzes the demand of French farmers for pesticides by disaggregating among the three main categories of pesticides. We estimate the demand elasticities of herbicides, insecticides, and fungicides with respect to pesticide expenditure, and also consider crop differentiation. We retain a Linear Approximated Almost Ideal Demand System specification. A Full‐Information Maximum Likelihood estimation procedure is used to deal with corner solution problems and censored data. The estimation is based on two cross‐sections covering pesticide use of three major crops cultivated in France in 2001 and 2006. Our results show that farmers' response to price variation is very low, especially for 2001. Furthermore, elasticities of pesticide expenditure are significantly different across categories: the highest levels are obtained for fungicides and the lowest ones for insecticides. Finally, we find higher own‐price elasticities for herbicides and fungicides than for insecticides, which are less frequently used.     

Quantifying the structure of food demand in China: An econometric approach

This article examines food demand structure and its dynamics for 11 commodities in urban China. The analysis is based on household‐level expenditure survey data for two cross‐sectional surveys of Chinese households pertaining to food expenditure patterns during 1995 and 2003. Pre‐committed components of commodity demands, that are insensitive to economic variables, are explored. We use the generalized quadratic almost ideal demand system (GQAIDS) for its empirical superiority to the generalized almost ideal demand system (GAIDS), and estimate the associated parameters via full information maximum likelihood procedure (FIML) accounting for endogeneity of total expenditures on food for home consumption (FAH). We also use quality‐adjusted commodity unit values to control for quality differences resulting from commodity aggregation and food choice. Furthermore, we derive GQAIDS elasticity formulas, and estimate income elasticities without restrictions. The results partially support the hypothesis that an average Chinese household has incorporated elements of Western diet (fine grains) into traditional Chinese food diet over time. Moreover, the outcome of a simple test developed here points to possible preference changes for a majority of food staples under study.     

How do obese people afford to be obese? Consumption strategies of Russian households

This article investigates the extent to which Russian households that differ in their members’ weight status adjust their food consumption differently when their economic resources change. Using household‐panel data from the Russia Longitudinal Monitoring Survey (RLMS) from 1995 to 2005, we estimate total expenditure elasticities of food expenditures, food quantities, and food quality for normal‐weight, overweight, and obese households, respectively. The expenditure elasticities of quality derived for obese households for meat, bread, fruits, and dairy were found to be 15–20% higher than those of normal households. Hence, a change in economic resources causes obese households to adjust the quality of purchased foods significantly more flexibly than normal‐weight households. Only few differences were found for quantity and expenditure reactions. Our results emphasize that policies aiming to reduce obesity should consider deviations in consumption behavior of normal and obese consumers in terms of quality.     

Nutrition Transition and Changing Food Preferences in India

We present empirical evidence on how changes in food preferences have contributed to nutrition transition, where the dietary pattern of households shifts away from traditional staples. Using household-level time series cross-section survey data for India, we estimate time varying demand elasticities, revealing evidence of the declining importance of cereals in Indian household diets. The estimates show that Indian demand for cereals has become more income inelastic and price elastic. We also find that cereals are a substitute rather than a complement to animal products in household diets. Since changes in elasticities can only be attributed to variation in utility parameters, this indicates that cereals are losing favour with Indian households. These findings have implications for Indian food policy design and implementation.     

Implications of high food prices for poverty in Pakistan

The study estimates the impacts of rising world food prices on poverty in rural and urban areas of Pakistan. Household income and expenditure data for 2004/2005 is used to estimate compensated and uncompensated price and expenditure elasticities using the linear approximation of the almost ideal demand system. Taking the unexpected component of higher domestic food prices in 2007/2008, own and cross price compensated elasticities are used to derive the changes in the quantity consumed, food expenditure and impacts on poverty assuming the food crisis happened in 2004/2005. The results indicate that poverty increased by 34.8%, severely affecting the urban areas where poverty increased by 44.6% as compared to 32.5% in rural areas. The estimates show that 2.3 million people are unable to reach even one‐half of poverty line expenditures while another 13.7 million are just below and 23.9 million are just above the poverty line. In the short run, it is important to ensure food availability to these people. In the long run, the policy environment of subsidizing urban food consumers by keeping wheat prices lower than the international price, needs to be reconsidered to provide the right incentives to increase food availability.     

Food demand elasticities for Australia

There is renewed interest in robust estimates of food demand elasticities at a disaggregated level not only to analyse the impact of changing food preferences on the agricultural sector, but also to establish the likely impact of pricing incentives on households. Using data drawn from two national Household Expenditure Surveys covering the periods 1998/1999 and 2003/2004, and adopting an Almost Ideal Demand System approach that addresses the zero observations problem, this paper estimates a food demand system for 15 food categories for Australia. The categories cover the standard food items that Australian households demand routinely. Own‐price, cross‐price and expenditure elasticity estimates of the Marshallian and Hicksian types have been derived for all categories. The parameter estimates obtained in this study represent the first integrated set of food demand elasticities based on a highly disaggregated food demand system for Australia, and all accord with economic intuition.     

Heterogeneity in Food Demand among Rural Indian Households: The Role of Demographics

Food expenditures, influenced by social, demographic, and economic factors, constitute a significant proportion of the typical rural Indian's household income. Based on cross‐sectional household data, this study employs the Quadratic Almost Ideal Demand System to estimate food demand among rural Indian households. Special attention is given to the rural household's two‐stage budgeting in total food expenditure and then to a demand for a specific food item. Conditional and unconditional expenditure and price elasticities for seven food groups are estimated. Results indicate that own‐price elasticities for each group are negative ranging from fairly inelastic to elastic range. Expenditure elasticities indicate that food items are a normal necessity to luxury goods. Additionally, socio‐demographic factors play a significant role in food consumption patterns. Based on our unconditional expenditure elasticities, we also project food demand from rural Indian households for next two decades. Les dépenses alimentaires, qui sont influencées par des facteurs socioéconomiques et démographiques, absorbent une partie considérable du revenu des ménages ruraux typiques en Inde. Dans la présente étude, nous avons utilisé le modèle de demande quasi idéal quadratique pour estimer, à l'aide de données transversales sur les ménages, la demande alimentaire des ménages ruraux en Inde. Nous avons accordé une attention spéciale à la budgétisation en deux étapes des dépenses alimentaires totales et à la demande d'un produit alimentaire particulier du ménage rural. Nous avons estimé les dépenses conditionnelles et inconditionnelles et l’élasticité‐prix de sept groupes alimentaires. Les résultats de notre étude indiquent que l’élasticité‐prix de chaque groupe est négative et qu'elle varie de plutôt inélastique à divers degrés d’élasticité. L’élasticité des dépenses indique que les produits alimentaires varient de nécessités de base à produits de luxe. Les facteurs sociodémographiques jouent également un rôle important dans les habitudes de consommation alimentaire. D'après les élasticités des dépenses établies dans notre étude, nous avons estimé la demande alimentaire des ménages ruraux en Inde pour les deux prochaines décennies.     

Disaggregated econometric estimation of consumer demand response by alcoholic beverage types

The paper presents estimates of price elasticities of demand for 12 disaggregated alcoholic beverages in Australia: premium beer, full strength beer, low alcohol beer and mid‐strength beer; red bottled wine, white bottled wine, sparkling wine, cask wine; dark and light ready‐to‐drink (RTD); and dark and light spirits. These disaggregated categories correspond closely to the commodities of interest to public policymakers with respect to taxation and health policies. The system of demand equations is estimated with Nielsen's data using a semiflexible Almost Ideal Demand System model in order to impose negative semi‐definiteness on the demand parameters. Results indicate elastic own‐price elasticities for virtually all commodities. Cross‐price elasticities suggest that beverages most linked with negative externalities, namely full strength beer, dark RTD and dark spirits, may need to be taxed jointly. Any proposed tax increase to cask wine may also result in consumers shifting demand to more undesirable beverages. The elasticity estimates are used to illustrate the effect of a hypothetical change towards taxation equalisation based on alcohol content. These elasticities offer crucially needed inputs for analysing any tax change policies.     

The demand for alcoholic beverages in Spain

The objective of this study is to analyze the main determinants of alcoholic beverages consumption at home. Data comes from the latest Spanish Household National Survey, which provides information on expenditure and quantities of different food products by household. Because households are interviewed only 1 week, a large number of zeros have been recorded. Among the existing censured demand models (the double hurdle (DH) model; the purchase‐infrequency model; and the Tobit purchase‐infrequency model, among others) and after carrying out model selection tests, the DH model has been finally estimated. All expenditure elasticities are positive, corresponding the highest value to spirits. Own price elasticities are negative and also in this case the spirits exhibit the highest value. Socio‐economic variables also play an important role in explaining consumer purchase and consumption decisions.     

Demand for animal‐derived food in selected Asian countries: A system‐wide analysis

Food consumption patterns in Asia show a trend away from staples toward high protein food derived from animal and dairy products, fruit and vegetables, fats and oils. Such changes in food consumption patterns are due to rising incomes, urbanization, globalization, and modernization of marketing infrastructure. In this article, we analyze the demand for the animal‐derived food group comprising meat (chicken, beef, pork, and mutton), eggs and fish, and derive income and price elasticities in seven Asian countries using the system‐wide approach. Demand homogeneity and Slutsky symmetry properties were tested and found to be compatible with the data. Our findings reveal that animal‐derived food as a group is a necessity (except in Taiwan) and its demand is price inelastic (except in Taiwan and Sri Lanka). The implied unconditional demand elasticities reveal that, in all countries (except beef in Japan and Taiwan), chicken, beef, pork, mutton, eggs and fish (except in Taiwan) are all necessities and the demand for all types of animal‐derived food in all seven countries are mostly price inelastic. The cross‐price elasticity estimates are mostly found to be positive, meaning that there is a higher degree of substitutability between chicken, beef, pork, mutton, eggs, and fish.     

A Meta‐Analysis on the Elasticity of Demand for Pesticides

There is an increasing policy interest in pesticide taxation schemes as a measure to reduce harmful effects of pesticide use. The effectiveness of such tax depends, however, on the price elasticity of demand for pesticides. Moreover, information on these demand elasticities and their determinants is of crucial relevance for policy‐making and normative modeling approaches. In this article, we present a meta‐analysis based on studies that have estimated pesticide demand elasticities in Europe and North America. Our meta‐analysis reveals that the own‐price elasticities of demand for pesticides are, with a median of ?0.28, significantly smaller than zero, but also significantly larger than ?1, i.e. to be inelastic. We find that the demand for pesticides for special crops is less elastic than that for arable and grassland. In addition, the demand for herbicides is more elastic than for other pesticides. Studies that consider only short‐term horizons and little flexibility for farmers to adjust to price changes generate significantly less elastic pesticide demands. The results also indicate that more recent studies identify lower pesticide price elasticities of demand. Furthermore, we find that peer‐reviewed studies tend to find more inelastic results compared to grey literature.     

The demand for selected nutrients by Greek households: an empirical analysis with quantile regressions

The article uses information from the 1993–1994 Household Consumption Survey and the semiparametric quantile regression approach to analyze the demand for three macronutrients (carbohydrates, proteins, and fats) and three micronutrients (minerals, vitamins, and cholesterol) in Greece. According to the empirical results the age of the household head, the degree of urbanization, the percentage of food expenditure devoted to food away‐from‐home, and the per capita consumption expenditure affect the intakes of nutrients across all the five quantiles considered. The impact, however, of the household head's gender and the impact of his (her) educational achievement are located only at the lower and the higher quantiles, respectively. The expenditure elasticities are substantially lower than unity, suggesting inelastic responses of nutrient intakes to per capita consumption expenditure.     

Estimates of Food Demand Elasticities for Great Britain: 1972–1994

This paper reports the results of the estimation of Almost Ideal Demand Systems (AIDS) for UK food demand using time series data from the National Food Survey. A Bayesian approach is used to impose curvature restrictions in the model. The aim is to obtain estimates of Hicksian, Marshallian and expenditure demand elasticities for UK food which are fully consistent with static optimisation by consumers. Overall, the results concur with expectations as aggregate food demand is both price and income inelastic and individual food categories are mostly price and income inelastic. The notable exception being meat, specifically pork, beef and chicken.     

A cross-section analysis of household demand for food and nutrients in Tanzania

Undernutrition and malnutrition are still problems of unacceptable proportions in many developing countries. However, the debate on the roles of income and other socio-economic variables such as women’s education and household size on food and nutrient demand continues. This study examines the demand for food and nutrients amongst households in Tanzania, using recent survey data. A quadratic almost ideal demand system (QUAIDS) is employed to estimate price and expenditure elasticities, as well as the impact of socio-economic variables on food demand patterns. A moment-based instrumental variable approach is then used to analyse the determinants of nutrient demand. The results show that income and other socio-economic variables exert significant effects on the demand for food and nutrients. The estimated expenditure elasticities for the nutrients range from 0.307 for iron to 1.26 for Vitamin B₁₂. The elasticities are higher for those micronutrients that are consumed through animal products and lower for those micronutrients that are mainly obtained through staple foods. These results reflect the higher expenditure elasticities for meat, fish, eggs, milk, and milk products, as well as fruits and vegetables, relative to cereals and pulses, reinforcing the assertion that the demand for Vitamins A and B₁₂, as well as calcium and zinc will increase with rising income.     

Markets and pro-poor agricultural growth: insights from livelihood and informal rural economy models in Malawi

This article presents the development of a set of programming models describing the major features of different rural livelihoods and of the informal rural economy they together make up in Malawi. The models allow for differentiated responses by different household types to change and for the partial equilibrium effects of consequent supply, demand, and price adjustments in labor and grain markets. The models provide insights into the relations between own‐farm and nonown‐farm activities in different households' livelihoods and in the informal rural economy as a whole, and are used to investigate possible impacts of increasing cash crop prices and of a more open rural economy. Impacts of these changes on the poor are found to be critically dependent upon supply and demand elasticities in labor and grain markets, but the poor could potentially suffer significant losses from increased openness of the local economy leading to increased expenditure by less poor households on imported goods and services.     

Using Elasticities from an Almost Ideal Demand System? Watch Out for Group Expenditure!

Group expenditure has often been treated as exogenous when estimating demand parameters for a group of commodities with an almost ideal demand system. Researchers draw demand elasticities from past literature to use in their own analysis, but elasticities contingent on exogenous group expenditure may be inappropriate. Here, the approach is considered in the case of Japanese meat demand with a simple equation added to estimate group expenditures. The results show that elasticities should be revised and that a group expenditure equation is not a panacea as it may result in the violation of theoretical restrictions, such as symmetry.     

Price Endogeneity and Food Demand in Urban China

Price endogeneity has been ignored in previous analyses of food demand in urban China. We exploit data provided by the China National Bureau of Statistics on agricultural commodity supply shifters and use reduced‐form price equations to account for price endogeneity. Applying our unique econometric approach to the analysis of provincial‐level food demand in China, we find strong statistical evidence of price endogeneity. Models that ignore price endogeneity result in substantially biased elasticities and misleading estimates of future food demand in China.