No full-text available
To read the full-text of this research,
you can request a copy directly from the authors.
Household demand in rural China: a two-stage LES-AIDS model
Abstract
A complete demand system of Chinese rural households is estimated using a two-stage LES-AIDS model and pooled provincial and
time-series data from 1982 to 1990. For commodity groups (food, clothing, fuel, housing, and other commodities), demand is
price-inelastic. Housing and other commodities are luxury goods, while clothing and food are necessities. Within the food
group, price elasticities range from −0.005 to −0.63. Expenditure elasticities are lower for grains and higher for meat, tobacco,
and alcohol. The results imply a gap between food demand and supply growth. Therefore, China will face pressure to import
food.
... Although numerous papers on Chinese household consumption issues have been published since the 1980s (Lardy 1984;Lewis and Andrews 1989;Garnaut and Ma 1993;Fan et al. 1995;Shi et al. 1995;Gao et al. 1996a,b;Wu 1999;Gould 2002;Zhou and Tian 2005), these studies have either tended to focus on the broader segment of household food consumption or used outdated or unreliable data and have not explained the recent meat-consumption issues convincingly. In addition, most previous studies using micro-level survey data did not consider zero expenditure on some items (Fan et al. 1995;Cai et al. 1998;Ma et al. 2004;Wang et al. 2004Wang et al. , 2005, which has been found to lead to bias in estimation (Haines et al. 1988;Heien and Wessells 1990;Perali and Chavas 2000;Mihalopoulos and Demoussis 2001;Jabarin 2005; Figure 1 Meat consumption per capita in rural and urban China (1980 and2005). ...
... Although numerous papers on Chinese household consumption issues have been published since the 1980s (Lardy 1984;Lewis and Andrews 1989;Garnaut and Ma 1993;Fan et al. 1995;Shi et al. 1995;Gao et al. 1996a,b;Wu 1999;Gould 2002;Zhou and Tian 2005), these studies have either tended to focus on the broader segment of household food consumption or used outdated or unreliable data and have not explained the recent meat-consumption issues convincingly. In addition, most previous studies using micro-level survey data did not consider zero expenditure on some items (Fan et al. 1995;Cai et al. 1998;Ma et al. 2004;Wang et al. 2004Wang et al. , 2005, which has been found to lead to bias in estimation (Haines et al. 1988;Heien and Wessells 1990;Perali and Chavas 2000;Mihalopoulos and Demoussis 2001;Jabarin 2005; Figure 1 Meat consumption per capita in rural and urban China (1980 and2005). Note: meat consumption refers to the consumption of pork, poultry, beef and mutton. ...
... Essential criteria for selecting a demand model are relative illustrative power, consistency with economic theory and simplicity of estimation (Wang et al. 1996). Therefore, the AIDS model has been chosen in the present study because of its theoretical and practical considerations, and popularity in demand analysis (Blanciforti and Green 1983;Fujii et al. 1985;Fulponi 1989;Heien and Wessells 1990;Fan et al. 1995;Huang 1999;Wu 1999;Ma et al. 2004;Jabarin 2005;Gould and Villarreal 2006). In addition, the estimated coefficients in a linear approximate almost ideal demand system (LA-AIDS) are easy to interpret (Fulponi 1989;Jabarin 2005). ...
This paper investigates significant forces that affect away-from-home (AFH) meat consumption in China. Multivariate Tobit models were used to analyze a set of survey data from 340 households in Jiangsu, Shandong, Inner Mongolia, Liaoning, and Sichuan Provinces in 2005. AFH meat consumption accounts for an increasing share of food consumption expenditure in China. Aside from income level and urban location, family characteristics (e.g., the employment status of the wife and the opportunity to participate in collective consumption) also influence AFH meat consumption. Beef and mutton consumption is higher in Inner Mongolia and Liaoning. This paper makes the case that studies of food consumption in China should focus on expenditure on food away from home. In addition, future studies should integrate food consumption at home with food consumption away from home. As the Chinese economy continues to grow and the country becomes more urbanized, the wealth generated will result in further rapid growth in AFH beef consumption. Sourcing an adequate supply to meet the increasing demand will pose a significant challenge for the Chinese beef industry and the Chinese government.
... An AIDS/QUAIDS approach has been widely applied to analyze the determinants of food demand (Fan et al., 1995;Gao et al., 1996;Yen et al., 2004;Zheng and Henneberry, 2011;Zhou et al., 2015). The estimation method of the AIDS/QUAIDS model in previous studies mainly uses the iterative seemingly unrelated regression (SUR) estimator proposed by Zellner (1962) ( Yen et al., 2003;Ma et al., 2004;Liu et al., 2009); however, the SUR estimator is a special case of the generalized method of moments (GMM) estimator (Hayashi, 2000), which can effectively solve the potential endogeneity problem of the model and the non-normal distribution issue of residuals (Banks et al., 1997;Abdulai and Aubert, 2004). ...
... First, the conditional expenditure elasticities of grain foods and vegetables estimated in this study (0.877 and 0.958) are higher than most of the conditional expenditure elasticities for urban residents (Yen et al., 2004;Zheng andHenneberry, 2009, 2010;Hovhannisyan and Gould, 2011) and less than those for rural residents (Yan and Chern, 2005;Jiang and Davis, 2007). As for the conditional expenditure elasticity of livestock products, our estimation (1.081) falls within the range of most of the estimates from other studies except Fan et al. (1995), Huang and Rozelle (1998) and Jiang and Davis (2007), whose report value are 1.271, 0.85/0.33 and 1.22, respectively. Meanwhile, the conditional expenditure elasticities of edible oil (0.787) in this study is higher than Zheng andHenneberry (2009, 2010) and Hovhannisyan and Gould (2011) but less than other studies. ...
... Third, the unconditional expenditure elasticity of vegetables in this study (0.693) is higher than the maximum value of rural residents (0.668) estimated by Fan et al. (1995). Meanwhile the unconditional expenditure elasticity of livestock for outgoing rural migrant workers (0.782) is less than those for rural residents reported by Fan et al. (1995) and Jiang and Davis (2007), whose value are 0.898 and 0.76, respectively. ...
Purpose
In the process of economic development and urbanization, it is important to capture the outgoing rural migrant workers’ food consumption characteristics for ensuring China’s future food security. The purpose of this paper is to empirically analyze the structural characteristics in food consumption demand of outgoing rural migrant workers.
Design/methodology/approach
The food consumption of rural migrant workers is estimated using a quaids approach by the GMM estimator to reveal the determinants of the food consumption of outgoing rural migrant workers in urban China based on a sample of 876 of outgoing rural migrant workers from the 2007-2009 household survey conducted by the National Bureau of Statistics of China.
Findings
The results show that the GMM estimator is consistent compared with the SUR estimator; the conditional expenditure elasticities of grain foods, livestock products, edible oils and vegetables by outgoing rural migrant workers are0.877, 1.081, 0.787 and 0.958, respectively; the unconditional expenditure elasticities of grain foods, livestock products, edible oils and vegetables are 0.634, 0.782, 0.569 and 0.693, respectively; the conditional Marshallian own-price elasticities of grain foods, livestock products, edible oils, and vegetables are -1.004, -1.019, -0.645 and -1.021, respectively.
Practical implications
First, the differences in food consuming patterns between rural residents and outgoing rural migrant workers should be emphasized in ensuring China’s food security for the policymakers. Second, how to ensure the supply for the increase in the consumption demand of livestock products in urban areas should be a major focus of China’s food security strategy.
Originality/value
876 households of outgoing rural migrant worker from the 2007-2009 household survey conducted by the National Bureau of Statistics of China are used; compared the GMM estimator with the SUR estimator in the estimate of the QUAIDS model; it sheds light on the structural characteristics in food consumption demand of outgoing rural migrant workers.
... The estimation of food demand elasticity is an important aspect of food consumption research [25]. Researchers have constructed various models to estimate the price elasticity of food demand and the income (or expenditure) elasticity of demand for food among Chinese residents based on utility maximization and budget constraints [26][27][28][29][30][31][32]. It has been demonstrated that most income elasticity with respect to food demand in China is positive, as reviewed by Chen et al. [33]. ...
... The first is urban-rural heterogeneity [26,35]. Han and Chen estimated the food demand elasticity of migrant workers living in urban areas and demonstrated the heterogeneity of food demand elasticity among urban residents, rural residents, and migrant workers [28]. ...
China is facing a rapidly aging population, and the proportion of the working-age population (WAP) is showing a decreasing trend. In this study, we use a two-stage budgeting quadratic almost-ideal demand system framework to estimate the distribution of food demand elasticity under different proportions of the WAP in rural China. The results show that the income elasticities of rural residents’ demand for fruits and vegetables, animal products, oils and fats, and grains were 0.73, 0.65, 0.55, and 0.48, respectively. Additionally, the income elasticity of rural residents tended to increase as the household proportion of the WAP decreased. These results can provide a deeper understanding of the food consumption patterns of rural residents in China, and could be used in general or partial equilibrium models to forecast food supply and demand.
... The results demonstrated a broad scope for both food consumption and cereal grains production in the context of China, including skeptical and ideological perspectives on the nation's grain imports. It might be possible because the more significant part of the cynical projections were made during the 1990 s and early 2000 s and frequently originated from unseeing doubts about China's food production efficiency [3,22]. Norse et al. [61] studied the forecast of food demand and supply in China in the 2020 s regarding cereals, and other significant food products found that it will be an independent country soon regarding rice production and wheat production i.e. accounting for 90% of corn and other cereal crops in 2020 s. ...
... The main driving factor of food insecurity includes the decrease of arable land due to urbanization and pressure from the growing population, which in turn causes an increased demand for food and changes in the consumption of food patterns [22,30,31]. During the midst of the 1990 s, due to carbon emissions, food consumption patterns lead to the reduction of food demand owing to the increasing demand for livestock products and food security [8,18,33,54,88]. ...
The aim of this study is to investigate the green growth of cereal food production under the constraints of agricultural carbon emissions and area sown. A qualitative time-series data from 1985 to 2018 was used to analyze the Autoregressive distributed lag (ARDL), vector error correction model (VECM), and Novel dynamic ARDL models. The empirical results of the long-run and short-run nexus show that the increasing in area sown and food production index resulting to increase cereal food production. While agricultural carbon emission only confirms short-run significant negative effect and predicts that the decreasing agricultural carbon emissions will support to the increase of cereal food production. The novel dynamic ARDL model revealed that in long-run 10% positive change in agricultural carbon emission decreases cereal food production and a 10% decrease in agricultural carbon emission will steadily increase cereal food production. Besides, the VECM model results predict that bidirectional Granger causality runs from area sown and food production index to the cereal food production while unidirectional Granger causality exists from cereal food production to agricultural carbon emissions. Overall, conclusion the agricultural carbon emissions and area sown are accountable for reducing cereal food productivity. By switching from chemical fertilizers to organic fertilizers, farmers can enhance farm productivity in a healthy and sustainable environment.
... The results demonstrated a broad scope for both food consumption and cereal grains production in the context of China, including skeptical and ideological perspectives on the nation's grain imports. It might be possible because the more significant part of the cynical projections were made during the 1990 s and early 2000 s and frequently originated from unseeing doubts about China's food production efficiency [3,22]. Norse et al. [61] studied the forecast of food demand and supply in China in the 2020 s regarding cereals, and other significant food products found that it will be an independent country soon regarding rice production and wheat production i.e. accounting for 90% of corn and other cereal crops in 2020 s. ...
... The main driving factor of food insecurity includes the decrease of arable land due to urbanization and pressure from the growing population, which in turn causes an increased demand for food and changes in the consumption of food patterns [22,30,31]. During the midst of the 1990 s, due to carbon emissions, food consumption patterns lead to the reduction of food demand owing to the increasing demand for livestock products and food security [8,18,33,54,88]. ...
The aim of this study is to investigate the green growth of cereal food production under the constraints of agricultural carbon emissions and area sown. A qualitative time-series data from 1985 to 2018 was used to analyze the Autoregressive distributed lag (ARDL), vector error correction model (VECM), and Novel dynamic ARDL models. The empirical results of the long-run and short-run nexus show that the increasing in area sown and food production index resulting to increase cereal food production. While agricultural carbon emission only confirms short-run significant negative effect and predicts that the decreasing agricultural carbon emissions will support to the increase of cereal food production. The novel dynamic ARDL model revealed that in long-run 10% positive change in agricultural carbon emission decreases cereal food production and a 10% decrease in agricultural carbon emission will steadily increase cereal food production. Besides, the VECM model results predict that bidirectional Granger causality runs from area sown and food production index to the cereal food production while unidirectional Granger causality exists from cereal food production to agricultural carbon emissions. Overall, conclusion the agricultural carbon emissions and area sown are accountable for reducing cereal food productivity. By switching from chemical fertilizers to organic fertilizers, farmers can enhance farm productivity in a healthy and sustainable environment.
... As a comparison, Fan et al. (1995) reported an income elasticity of 0.71 for food in rural China (close to our estimates), while Hovhannisyan and Gould (2014) estimates of detailed urban food items ranged from 0.79 to 1.2. Fan et al. estimated 1.4 for services (same as ours) and 2.2 for rural housing, which is different from our 0.8-0.9 for urban housing. ...
... For price elasticities, Fan et al. (1995) report 0.5 for food, 0.6 for housing, and 0.6 for services for rural households. These are not different from our corresponding uncompensated elasticities for small-city households of 0.4, 0.6, and 0.4, which covers a more recent period. ...
Given the government’s goals to restructure the economy away from investment and exports to consumption and to reduce inequality, it is important to have a good understanding of China’s household consumption behavior and to obtain a good measure of consumption adjusted for price differences across regions. We estimate a consumption function that is flexible and distinguishes between different household types such as size and age of head. We develop detailed price data by region, including rental equivalents for owner‐occupied housing. This provides us the estimates of income and price elasticities of different consumption bundles that should be useful for analyzing public policies. We find distinct elasticities for residents of large and small cities. For all urban households the income elasticity for food is about 0.7–0.8, housing is 0.8–0.9, and services is 1.4–1.5. The price elasticity for food and services is about 0.5 and 0.8, respectively.
... As Zhang et al. (2012) reported, these notable changes include a greater demand for food, a demand for food diversity, and a demand for higher-quality food. This point of view is supported by other studies, which have found that households in rural China tend to consume more meat (Halbrendt et al., 1994;Fan et al., 1995) and other higher-quality foods (Yu and Abler, 2009) as incomes increase. ...
... Looking at the whole sample, the conditional and unconditional own-price elasticities as presented in Tables III and IV show higher magnitude than those from previous studies (Burggraf et al., 2015;Chen et al., 2015;Fan et al., 1995;Zheng and Henneberry, 2011). The results illustrate that these food commodities have shifted to be more price elastic for rural households, considering that households have more substitutional possibilities for those food commodities as the economy develops. ...
Purpose
Given the fact that the income disparity has become extremely severe in rural China, the purpose of this paper is to examine heterogeneity in food consumption among various income classes and to investigate the impact of changes in income distribution patterns on food demand in rural China.
Design/methodology/approach
In this study, the authors partition the households into five income classes according to the distribution of household per capita net income. Using household data drawn from the China Health and Nutrition Survey in 2011, a two-stage demand model is applied to estimate a food demand system for each of the income classes. After obtaining the estimated income elasticities of eight studied food groups for each income class, the authors then examine the responsiveness of food demand to the changes in income distribution by means of four scenarios with varying income distribution.
Findings
The empirical results indicate that substantial differences in food consumption exist across various income classes. Specifically, the lowest-income households are more sensitive to price and income changes for most studied food groups than the highest-income households are. In general, income responsiveness is higher for meats, aquatic products and dairy products. Based on estimated income elasticities, the projected food consumption under different income distribution patterns shows that changes in income distribution have significant influences on food consumption. In addition, the authors conclude that a more equal distribution of income would be associated with a higher demand for food in rural China.
Originality/value
This paper employs a two-stage demand model to estimate food demand in rural China by income classes. The results imply substantial differences in food demand for various income classes. Therefore, income distribution should be taken into account instead of an average estimation for the population as a whole when investigating food demand in rural China. Given the significant changes in income distribution in rural China, this study provides several important policy implications to alleviate income inequality and poverty, as well as to improve nutrition for lower-income classes.
... Since the budget shares add up to unity, therefore, during estimation one share equation was arbitrarily dropped to make the system non-singular. Equation (1) along with restrictions (3) and (5) were estimated using full information maximum likelihood method by following the iteration sequence as described by Fan, et al. (1995). Following Blanciforti, et al. (1986), the uncompensated income, own-price and cross-price elasticities were computed from the parameter estimates using the following expressions. ...
... Linear Expenditure System (LES) Frisch's Method Haden (1990) Japan Linear functional form with one year lagged budget shares as habit Almost Ideal Demand System (AIDS) Fan, et al. (1995) Mutton, beef, dry meat, fish (fresh, frozen and dry), prawns (fresh, frozen and canned), chicken, eggs and other poultry. Dairy products and fat Liquid milk, butter milk 'lassi', curd, milk cream, packed milk, dry milk, infants milk, adult milk, concentrated milk, butter, cheese, butter oil, ice cream, 'kheer', vegetable ghee, mustard oil, cooking oil and other fats Fruits (fresh and dry) ...
To quantify the micronutrient deficiencies and their overtime trends, food quantities reported to be consumed in HIES surveys data during 1991-92 and 2011-12 are converted into major and micronutrients using the FAO Food Composition Table for Pakistan. To see the impact of different price and income support policies on micronutrient consumption, nutrient demand elasticities are estimated for 2011-12 for carbohydrates (energy), protein, calcium, Vitamin A, vitamin C, Vitamin B1, Vitamin B2, and Niacin. The Almost Ideal Demand System (AIDS) is applied to estimate the demand elasticities of the eight food groups which are then converted into nutrient demand elasticities using the transformation of Hunag (1996). On average, per capita consumptions of almost all micronutrients are deficient compared to their respective recommended levels. Our analysis suggest that income support to the poor in Pakistan through programmes like BISP would have been much more effective to eradicate nutrient deficiency, if deficient nutrient(s) are targeted and support is provided to those foods having highest demand elasticity for that nutrient. For example, the promotion of wheat and other cereals are important to eradicate energy deficiency, and promotion of vegetables, fruits, and milk are particularly important in eradicating Vitamin A, C and iron deficiencies. These commodities are also high value crops for farmers, thus the price support in these crops will also impact micronutrient consumption through income effect.
... China has been the subject of extensive empirical studies on food demand during the past two decades using a wide range of models and data sources (e.g. Abler, 2010;Chern & Wang, 1994;Fan, Cramer, & Wailes, 1994;Fan, Wailes, & Cramer, 1995;Gao, Wailes, & Cramer, 1996;Gould & Villarreal, 2006;Huang & Rozelle, 1998;Jiang & Davis, 2007;Lewis & Andrews, 1989;Liu, 2003;Wu, Li, & Samuel, 1995;Yen, Fang, & Su, 2004;Yu, 2018;Zheng & Henneberry, 2009). However, the estimated demand elasticities in the literature are quite varied, and some even controversial (Abler, 2010). ...
... In the primary studies, some estimates focus on the national level (e.g. Fan et al., 1995;Lewis & Andrews, 1989;Wu et al., 1995), while others use regional datasets (e.g. Gao et al., 1996;Jiang & Davis, 2007;Liu, 2003;Zheng & Henneberry, 2009). ...
There are many projections for China's food demand, and the projection results differ significantly from each other. Different values for income elasticities could be a major reason. This study projects meat and cereals demand for China based on a meta-analysis of the income elasticity estimates using a collection of 143 and 240 income elasticity estimates for cereals and meat products, respectively, from 36 primary studies. We find that income elasticities for most cereals (general cereals, rice, and coarse grains) and all meat products (general meat, pork, poultry, beef & mutton) tend to decline as per capita income increases, except for wheat, which increases. Taking this into account, differences between consumption projections based on time-varying income elasticities and values based on constant elasticities are substantial in quantities and increase over time.
... On the basis of the economic model, a three-stage utility maximisation is assumed to simplify the construction of the decision-making process for South African households in connection with expenditure on vegetables. Various recent studies (Blundell et al., 1993;Fan et al., 1995;Gao et al., 1997;Tiffin and Tiffin, 1999;Dey, 2000) have used the multi-stage budgeting framework in estimating the demand functions for disaggregated commodity groups, thus justifying the economic model chosen for this study. In the first stage, a household makes decisions on how much of their total income is to be allocated for food consumption, conditional on household characteristics and the consumption of non-food goods (expenditure). ...
... This instrumental variable approach has been estimated by Blundell et al. (1993) and in other studies (Fan et al., 1995;Gao et al., 1997;Tiffin and Tiffin, 1999;Dey, 2000) via Tobit regression. The estimating equation for stage 2 is expressed as: ...
... The various models range from simple classical models such as the linear expenditure system or the Rotterdam system to more complex models such as the Almost Ideal Demand System (AIDS model). Applications of the AIDS model is quite popular for studying consumption behaviour and consumption modelling and has been widely used as in Syriopoulos and Thea Sinclair (1993), Fan et al. (1995), Yang and Koo (1994) and Ahmed and Shams (1994) which presents many interesting applications of the model and highlights many of its utilities. ...
Analysis and estimation of consumer expenditure and budget shares are important for understanding quantitatively the expenditure based behaviour of the people of a country or region. The costs attached with performing consumer expenditure and budget shares survey are significant. These surveys are quite time consuming and even a slight increase in sample size could lead to a significant increase in the cost of the survey under the current structure. This high cost for the survey also reduces its flexibility. Hence it is of paramount importance to be able to provide a statistically sound and relatively cheaper facilitation method of survey to be able to understand the consumption expenditure distribution of a country or a region without much loss of inferential power. In the context of the Indian National Sample Survey, in this paper we perform analysis and estimation of consumer expenditure assuming uniform prices across First Stage Units (FSUs) of a sampling design, and check its feasibility in estimating the consumer expenditure distribution of the country. We also compare it with the existing methodology and infer that there is no significant loss of information in the estimated consumer expenditure distribution and other inferences like the Lorenz curve and the Gini Index, when uniform distribution of prices within any FSU is assumed.
... The unique advantage of the MBF technique lies in its capacity to handle simultaneous equation for empirical estimation of system demand model when faced with a wide variety of consumption goods jointly purchased by households (Blundell et al., 1993;Fan et al., 1995;Tiffin and Tiffin, 1999). It is always difficult and impractical to estimate a full demand system consisting of all consumer goods which involves a large number of own and cross elasticity parameters under constraint of limited data availability. ...
Fast population growth, increase in per capita income and increase in level of awareness among the people regarding health are the main causes of increase in demand for nutritional and protein rich food. Fish is very good source of protein as well as vitamins. Fish may play a vital role to ensure the nutritional security in rural areas. Fish production and consumption has however undergone major uneven changes in the past four decades. It is found that at higher ends of the income distribution, the consumption of milk, eggs, meat, fish and processed foods have risen. Present study focuses on the demand for fish in Delhi and NCR in comparison to other items like chicken, mutton and eggs. A Three Stage Budgeting Framework of demand is used for present analysis. NSSO data of household consumption has been used for analysis. Per capita consumption of "fish", "chicken" and "mutton" in Delhi and NCR were estimated and it was found to be 4.04 kg/ annum, 2.27 kg/annum and 0.81 kg/annum respectively. So, per capita consumption of "fish" was found to be greater than "chicken" as well as "mutton". Income elasticity of demand was estimated for each income group of population and in most of the cases demand for fish was found to be income elastic. Compensated as well as non-compensated price elasticity of demand for fish was also estimated. It was found that price elasticity of fish was almost unitary elastic whereas price elasticity of chicken" and mutton were price inelastic. Fish demand was also projected up to 2020 and it was found to be 5.11 kg/capita/ annum in 2020. With increase in income of the population as well as awareness of health benefit of fish, it is expected that fish consumption will increase at a very fast rate in future. However the presence of a large proportion of vegetarian population in Delhi and NCR is a challenging proposition for increasing of overall fish consumption of Delhi and NCR.
... The AIDS demand estimation was used to estimate the demand of other commodities like; Crawford (2018) has estimated the demand for storable consumer goods in the United Kingdom. Fan, Wailes & Cramer (1995) has estimated the demand for food, clothing, fuel, housing, and other commodities. ...
Coconut is the second most important food and it is a highly demanded agricultural commodity in Sri Lanka. Supply shock and the price fluctuation is one of the major problem faced by coconut consumer. Therefore, estimating coconut demand is a needful topic to predict coconut production. The study estimated the domestic coconut income demand elasticity, uncompensated and compensated price elasticities using the Almost Ideal Demand System (AIDS). Secondary time-series data from 1995 to 2016 were collected from secondary sources. Coconut consumption was fluctuating and the price showed an increasing trend throughout the years. Further, the demand was relatively the same for any price held in time. Estimated income (expenditure) elasticity of coconut is 0.825; the Marshallian (uncompensated) and Hicksian (compensated) price elasticity of coconut are 0.758 and 0.725 respectively. Indicate that, the price and expenditure demand for coconut was inelastic. Therefore, it is considered as an essential good in Sri Lanka. However, the demand would increase shortly with the population growth in Sri Lanka. Hence, it is necessary for increasing the coconut production in the country.
... As disposable income increases and the market develops, consumers tend to shift from staple foods, such as grains, to more expensive food, such as animal products (Huang and Rozelle 1998;Yuan et al. 2018). A large number of studies have measured the impact of income on food consumption and its structure in rural China (e.g., Fan et al. 1994Fan et al. , 1995Han and Wahl 1998;Jiang and Davis 2007). Especially need to point out, the aforementioned empirical research assumed that rural residents with different income classes share an identical food consumption structure. ...
Previous studies have demonstrated that income has a significant effect on food demand in rural China. However, little research has focused on the dynamic impact of income and income distribution on food demand in rural China. Using China Health and Nutrition Survey data, this study employs a consistent two-step quadratic almost ideal demand system model, with addressed problems of endogeneity of total expenditure and zero shares, to estimate the food demand elasticities among adults in rural areas with regard to the different income strata. The results show that changes in income and income strata have significant effects on food demand in rural areas. Except for grains, all other food groups, including vegetables, oils and fats, animal products, and other foods, have positive income elasticities, and the rise in the income strata will lead to declining income elasticities for grains, vegetables, oils and fats, and animal products. Based on the estimated income elasticities, the food consumption projections indicate that reducing income inequality in rural society can improve the living standard of low-income people in terms of nutrient intakes.
... Models such as the Linear Approximate-AIDS, the Generalized AIDS (Bollino 1987), and the Quadratic AIDS (Banks, Blundell, and Lewbel 1997;Hovhannisyan and Gould 2011;Hovhannisyan and Gould 2012) have been popular in Chinese consumer behavior studies. Some well-known applications include Fan, Wailes, and Cramer (1995), Huang and Rozelle (1998), Gould and Villarreal (2006), and Gale and Huang (2007). What makes these models particularly appealing is that they are theory-consistent, that is, they satisfy budget constraints and the axioms of order, aggregate over consumers without invoking parallel linear Engel curves, and are relatively simple to estimate. ...
The recent rise in food prices in China triggered by global commodity price spikes led to growing welfare concerns among economists and policymakers. While evidence suggests the Chinese government was successful in preventing major upswings in food prices, the true impact on consumer welfare remains unknown. This study examines consumer welfare consequences of food price increases in China based on the Fixed‐Effects Exact Affine Stone Index (FE‐EASI) demand model that accounts for unobserved consumer and provincial heterogeneity estimated on nationally representative provincial‐level panel data. The effects of actual price changes as well as two policy initiatives are evaluated. The major findings indicate that urban wages outpaced food prices, and consumer welfare loss has been moderate as a fraction of food expenditures. The results of policy analysis indicate that government subsidies overcompensated the negative effects of price increases for the relatively less affluent households.
... The Uniqueness of A multistage budgeting framework is that it extends the idea of an exhaustive expenditure system to different levels or stages. This framework addresses a common problem in empirical estimation of system demand models requiring a sizeable number of equations, given the wide variety of consumption goods jointly purchased by households (Blundell, Pashardes, and Weber 1993;Fan, Wailes, and Cramer 1995). Specifically, a full demand system containing all consumer goods warrants a huge number of own-and cross-price parameters that are impractical to estimate under the constraint of limited data. ...
... To examine vulnerability of these households and the role that fish plays in their food baskets, a household food dependency ratio (Engel, 1857;Timmer et al., 1983) and food expenditure shares were calculated (Fan et al., 1995;Holcomb et al., 1995). Again, these differed significantly between Upper and Lower Egypt. ...
A number of studies have highlighted the promising growth of Egyptian tilapia aquaculture and the role of genetically improved strains in this development, such as the Abbassa Nile tilapia (Oreochromis niloticus, Linneaus, 1758). However, few studies have explored the link between aquaculture development and changes in fish demand among low-income consumers. This study combines household budgeting questionnaires and morphometric tilapia trait rankings conducted in the peak market season of 2017 to examine patterns of tilapia consumption and preferences among low-income women and men consumers across Egypt. Analysis of variance tests and a hierarchical logistic regression model were employed to determine effects of sex, age, educational status, household size, presence of children, food dependency ratio and location on tilapia consumption and trait preferences. Results showed significant differences in tilapia consumption between Lower and Upper Egypt. Greatest heterogeneity in tilapia trait rankings was found in preferences for total body weight, as well as for body width, body length and tilapia head traits. Models predicted that younger women consumers with children in Lower Egypt were more likely to consume smaller tilapia sizes and prefer larger tilapia head traits. This study offers the first evidence base of tilapia trait preferences of low-income consumers to genetic selection programmes considering the adoption of pro-poor and gender-responsive breeding objectives.
... Jiang and Davis also gives a summary of prior studies of household demand in China, highlighting how few of them take household characteristics into account. There are very few studies that include a complete set of consumption items; Fan, Wailes, and Cramer (1995) who estimated a 2-stage LES-AIDS model using rural provincial data from to 1990, and Cao, Ho, Hu, and Jorgenson (2017 estimated a translog model using urban data. ...
There are few comprehensive studies of household consumption in China due to data restrictions. This prevents the calculation of inequality indices based on consumption. Secondly, this makes a comprehensive analysis of policies that affect consumption difficult; economy-wide models used for analysis often have to employ simple consumption forms with unit income elasticities. We estimate a translog demand system distinguished by demographic characteristics, giving price and income elasticities that should be useful for policy analysis. We estimate separate functions for urban and rural households using household expenditure data and detailed commodity prices (1995–2006). This allows future analysis of social welfare and inequality based on consumption to supplement existing studies based on income. To illustrate an application of the model, we project consumption composition based on projected prices, incomes and demographic changes – aging, education improvement and urbanization.
... To examine vulnerability of these households and the role that fish plays in their food baskets, a household food dependency ratio (Engel, 1857;Timmer et al., 1983) and food expenditure shares were calculated (Fan et al., 1995;Holcomb et al., 1995). Again, these differed significantly between Upper and Lower Egypt. ...
A number of studies have highlighted the promising growth of Egyptian tilapia aquaculture and the role of genetically improved strains in this development, such as the Abbassa Nile tilapia (Oreochromis niloticus, Linneaus, 1758). However, few studies have explored the link between aquaculture development and changes in fish demand among low-income consumers. This study combines household budgeting questionnaires and morphometric tilapia trait rankings conducted in the peak market season of 2017 to examine patterns of tilapia consumption and preferences among low-income women and men consumers across Egypt. Analysis of variance tests and a hierarchical logistic regression model were employed to determine effects of sex, age, educational status, household size, presence of children, food dependency ratio and location on tilapia consumption and trait preferences. Results showed significant differences in tilapia consumption between Lower and Upper Egypt. Greatest heterogeneity in tilapia trait rankings was found in preferences for total body weight, as well as for body width, body length and tilapia head traits. Models predicted that younger women consumers with children in Lower Egypt were more likely to consume smaller tilapia sizes and prefer larger tilapia head traits. This study offers the first evidence base of tilapia trait preferences of low-income consumers to genetic selection programmes considering the adoption of pro-poor and gender-responsive breeding objectives.
... Min et al. (2004) used macro-level data to estimate the income effects on household dining out expenditure, but they did not pay specific attention to MAFH. Other studies on China's food consumption in general only focus on food at home (FAH) consumption (Wang and Chern 1992;Fan et al. 1995;Gao et al. 1996;Huang et al. 1999;Guo et al. 2000;Liu et al. 2009;Ortega et al. 2009;Dong and Fuller 2010). An explanation for this is that most studies utilise data from the National Bureau of Statistic China (NBSC) that only include total expenditure on dining at home (Ma et al. 2004;Bai et al. 2010). ...
This study examines meat consumption in China, the world's largest meat consumer and producer, by considering both meat consumed at home and away from home based upon a diary‐based household survey. The results indicate that income growth leads to beef, poultry, other meat and pork away from home consumption to grow more than proportionally to total meat consumption. We also find that meats consumed away from home grow faster than at home counterparts due to higher income elasticities, suggesting that ignoring meat away from home could significantly underestimate current and future meat consumption.
... For example, China, which is the focus of this study, is characterised by both a large population and significant differences in the level of income across the population, which combine to make it significantly different from other countries and regions where research has been undertaken. In terms of China, some studies have analysed food expenditure elasticities based on survey and statistical data in China (Fan et al., 1995;Jiang and Davis, 2007;Yu and Abler, 2016). Yu and Abler (2016), for example, found that income elasticities of food consumption are greater than measured elasticities based on the Rural Household Survey data. ...
Purpose
The purpose of this paper is to examine the impact of off-farm income on food expenditure, using survey data of 493 rural households from Gansu, Henan and Shandong provinces in China.
Design/methodology/approach
A two-stage least squares estimator is used to jointly estimate the determinants of off-farm income and the direct impact of off-farm income on food expenditure while controlling for the endogeneity issue associated with off-farm income variable.
Findings
The empirical results show that gender, education of household head, household size, farm size, the presence of children, smartphone use and asset ownership mainly determine off-farm income, and the off-farm income affects food expenditure of rural households significantly. In particular, the results show that a 1,000 yuan increase in per capita off-farm income increases per capita food expenditure by 61 yuan. Further estimations reveal that off-farm income has a larger effect on food expenditure of high-income rural households relative to their low-income counterparts.
Originality/value
Although poverty implications of off-farm income have been well documented, few studies have analysed the effects of off-farm income on food expenditure of rural households. To the best of the authors’ knowledge, there are no studies on this issue that focus on rural China. Therefore, the present study attempts to provide a first insight into the association between off-farm income and food expenditure of rural households in China, with the aim of providing useful evidence for policymakers in their efforts to reduce rural and urban food consumption gap and further increase social welfare.
... In view of the prominent role played by China on world food market, there has been extensive interest in modeling China's household demand for food. Recent studies include Fan, Wailes & Cramer (1995), Gao et al. (1996), Yen et al. (2004) and Chen et al. (2006). Nonetheless, most of these studies were conducted under the assumption of constant income distribution, which is not representative of the current situation in the Chinese economy. ...
This study provides an empirical analysis of the impact of changes in income distribution on food demand in China using data from China Health and Nutrition Survey. A new parametric form of an inverse demand system is introduced and estimated taking into account of reported zero consumption. This new form is a natural extension of recent works by Brown & Lee (2008) and McLaren & Wong (2009) which accommodates incorporation of income distribution into the system and imposition of global regularity conditions in estimation. Our results generally indicate that the distribution of households across income groups is important in determining food demand in China, and that a movement toward a more equal income distribution in China will stimulate the demand for vegetable, fruit, fish and eggs.
... Improving own-price and income elasticities for China. We ncorporated the most up-to-date estmates for prce and ncome elastctes of demand for various foods in China (Fan et al. 1995;Huang and Bouis 1996;Huang and Rozelle 1998). Table A13.4 summarises the major adjustments that have been made. ...
... Deaton [38] proposed that when the prices of various consumer goods have strong multi-collinearity, they can be approximated by linear relationship (LA-AIDS). Subsequently, the expansion of AIDS has gradually enriched, such as inverse AIDS, quadratic AIDS, two-stage linear expenditure system-approximate ideal demand system LES-AIDS, etc [43][44][45][46][47][48]. ...
China’s consumption rate has continued to decline since 2000, which has retarded the sustainable growth of China’s economy. The dramatic changes in China’s income distribution have been very significant social characteristics, and they are also a very important factor for consumption. Therefore, this study analyzes the problem of insufficient domestic demand from the perspective of the effects of the income distribution changes on the consumption structure. The Almost Ideal Demand System model is improved by relaxing its assumption that expenditure equals income and giving it a dynamic form that includes the three characteristics of the income distribution evolution (the mean, variance, and residual effects) and measuring these. The results show that the mean effect is the largest one, and it basically determines the size and direction of the total effect. The variance effect is much smaller, but it may have some positive effects on the individual markets. The residual effect is the smallest and has a certain randomness. The income gap is not the main cause of the insufficient domestic demand. It is more likely to be caused by the decline of the mean effect, and the main driver of this is the irrationality of the supply side and excessive housing prices.
... Demographic effects, especially geographical division, season, race, occupation, age-sex household composition, and price-income interaction, as a proxy for quality, are highly significant variables. Fan et al. (1995) estimated a complete demand system of Chinese rural households using a two-stage LES 1 -AIDS model and pooled provincial and time series data from 1982 to 1990. They found that demand for food, clothing, fuel, housing, and other commodities are price-inelastic. ...
The main objective of this article is to analyze the U.S. household final consumption expenditure using a Linear Approximate Almost Ideal Demand System (LA/AIDS) model for the period of 1989 through 2015. The six major groups of goods and services are (1) food and alcoholic beverage, (2) housing, (3) apparel and service, (4) transportation, (5) health care, (6) and other goods and services. The LA/AIDS model has been used through homogeneity and symmetry restrictions by using the seemingly unrelated regressions (SUR) method. The results show that price parameters are homogeneous of degree zero, and confirm the symmetry hypothesis for the nominal price parameters of goods and services with exception of the cross-price parameters between food and beverage expenditure and health care expenditure. The uncompensated own-price elasticities with negative signs in all groups are statistical significant with exception of uncompensated own-price elasticity demand for apparel and service. The estimated expenditure elasticities showed that medical care (not significant) and food and beverages can be considered as necessary goods whilst apparel and services, transportation, and other goods and services are close to being considered as luxury goods and services. Of the major six groups covered in this study, housing has a unit expenditure elasticity. Furthermore, the compensated own-price elasticities of all groups are relatively inelastic, and statistically significant with exception of compensated own-price elasticities for food and beverages and apparel and services.
http://www.journalijcar.org/sites/default/files/issue-files/3905-A--2017.pdf
... Demographic effects, especially geographical division, season, race, occupation, age-sex household composition, and price-income interaction, as a proxy for quality, are highly significant variables. Fan et al. (1995) estimated a complete demand system of Chinese rural households using a two-stage LES 1-AIDS model and pooled provincial and time series data from 1982 to 1990. They found that demand for food, clothing, fuel, housing, and other commodities are price-inelastic. ...
The main objective of this article is to analyze the U.S. household final consumption expenditure using a Linear Approximate Almost Ideal Demand System (LA/AIDS) model for the period of 1989 through 2015. The six major groups of goods and services are (1) food and alcoholic beverage, (2) housing, (3) apparel and service, (4) transportation, (5) health care, (6) and other goods and services. The LA/AIDS model has been used through homogeneity and symmetry restrictions by using the seemingly unrelated regressions (SUR) method. The results show that price parameters are homogeneous of degree zero, and confirm the symmetry hypothesis for the nominal price parameters of goods and services with exception of the cross-price parameters between food and beverage expenditure and health care expenditure. The uncompensated own-price elasticities with negative signs in all groups are statistical significant with exception of uncompensated own-price elasticity demand for apparel and service. The estimated expenditure elasticities showed that medical care (not significant) and food and beverages can be considered as necessary goods whilst apparel and services, transportation, and other goods and services are close to being considered as luxury goods and services. Of the major six groups covered in this study, housing has a unit expenditure elasticity. Furthermore, the compensated own-price elasticities of all groups are relatively inelastic, and statistically significant with exception of compensated own-price elasticities for food and beverages and apparel and services.
http://journalijcar.org/sites/default/files/issue-files/3905-A--2017.pdf
... As such, analyses of this sort tend to focus on a single harvest region, ignoring substitution possibilities from other sources (e.g., Beach and Holt 2001;Holt and Bishop 2002) or summing regional harvests into an aggregate supply thereby assuming away preferences between regions (e.g., Eales et al. 1997;Wong and McLaren 2005). When faced with a large number of commodities analysts estimating direct demands have instead invoked weak separability and used multi-stage budgeting to model consumer choice in a series of steps (Strotz 1959;Gorman 1959;Brown and Heien 1972;Fan et al. 1995;Edgerton 1997). In the first step consumers allocate expenditures among commodity groups and then further divide those expenditures between the elementary commodities in subsequent steps. ...
Like many agricultural commodities, fish and shellfish are highly perishable and producers cannot easily adjust supply in the short run to respond to changes in demand. In these cases it is more appropriate to conduct welfare analysis using inverse demand models that take quantities as given and allow prices to adjust to clear the market. One challenge faced by economists conducting demand analysis is how to limit the number of commodities in the analysis while accounting for the relevant substitutability and complementarity among goods. A common approach in direct demand modeling is to assume weak separability of the utility function and apply a multi-stage budgeting approach. This approach has not, however, been applied to an inverse demand system or the associated welfare analysis. This paper develops a two-stage inverse demand model and derives the total quantity flexibilities which describe how market clearing prices respond to supply changes in other commodity groups. The model provides the means to estimate consumer welfare impacts of an increase in finfish and shellfish harvest from the Chesapeake Bay while recognizing that harvests from other regions are potential substitutes. Comparing the two-stage results with single-stage analysis of the same data shows that ignoring differentiation of harvests from different regions, or the availability of substitutes not affected by a supply shock, can bias welfare estimates.
... In practice, the LA-AIDS model is used more frequently than the non-linear AIDS model [4]. The estimates from an LA-AIDS model would approach the estimates for AIDS except for an intercept term. ...
... Sixthly, it aggregate perfectly across consumers without invoking parallel linear Engel curve, and finally, it has a functional form which is consistent with known household budget data. Halbrendt et al (1994) and Fan et al (1995) applied the AIDS model to analyze the household pattern in china. The two studies found that the lowest expenditure elasticities are found in grain. ...
The study examined the socio-economic characteristics of food consuming households, estimated the complete demand functions for some selected common food commodities, their prices and expenditure elasticities in Akoko South West (ASW) local government in Ondo state, Nigeria. The study examined demand analysis for food in ASW, using primary data with the use of questionnaire on some selected food-consuming households within the study area. Data collected were subjected to descriptive statistics for estimating demographic variables. The result of the descriptive statistics showed that semolina constituted the largest share of the household total food expenditure, among the low income and rural households but mostly among the married and the medium-size male-headed households who had tertiary-education. The Almost Ideal Demand System results showed that besides being a normal good, price inelastic, and expenditure inelastic, semolina has changed from being a luxury to being a necessity and has become a major food staple in the ASW metropolis. In conclusion, the study discovered that the prices of rice, beans, yam, garri, wheat, yam flour, and semolina were significantly important in the share of household total food budget at constant real income. Finally, the study showed from the result that the importance of semolina in ASW metropolis diet will increase as economic growth continues. This study therefore recommends that effort should be made to boost economic activities of ASW zone. This will increase their income and consequently improve their spending on the nutritious food items.
... As incomes increase, households often increase their spending on food away from home (FAFH) in restaurants, cafeterias, food stalls, and other venues (Ma et al., 2006;Bai et al., 2010;Liu et al., 2015;Jiang et al., 2015). Even if FAFH expenditure is wellrecorded in household surveys, these surveys may not collect data on the quantities of foods consumed away from home, as is the case for the Chinese Rural Household Survey. 2 Due to a lack of price and quantity information, FAFH is often neglected in food demand analyses, such as Fan et al. (1995) and Gao et al. (1996). Fig. 3 shows the changes in the share of FAFH in total food expenditure in rural China. ...
This study provides an alternative explanation for the unusual apparent decline in food consumption in rural China after 2000. We find that it is mainly attributable to significant measurement errors in the Chinese Rural Household Survey and the calculation of per capita food consumption. In a household survey, total consumption for a household in a certain period is often well recorded, and per capita consumption is obtained by dividing total consumption by household size. Such a calculation of per capita food consumption is vulnerable to a mismatch between food and mouths. Total consumption may be subject to measurement errors caused primarily by food away from home (FAFH). Also, the household size recorded in the survey is not necessarily the same as the number of mouths (consumption household size), who consume the food recorded in the survey. Our results indicate that per capita food consumption in rural China is currently being underestimated by about 30%. Our results also indicate that income elasticities of food consumption are greater than measured elasticities based on the Rural Household Survey data. A direct policy implication for avoiding statistical errors in calculating per capita consumption would be correctly recording the consumption household size corresponding to total consumption in household surveys.
... Consumer income is increasing in rapidly-growing countries, such as China, India and Malaysia, which is inducing major changes in the amount and composition of food consumed ( Garnaut and Ma 1992, Cranfield et al. 1998, Coyle et al. 1998, Regmi et al. 2001, Jones et al. 2003, Ishida et al. 2003, Liu et al. 2009, and Gandhi and Zhou 2010). The significant implications of changes in food consumption in China have led researchers from within and outside China to examine the issue (see, for example, Halbrendt et al. 1994, Fan et al. 1995, Brown 1995, Wu and Li 1995, Huang and Rozelle 1998, Wan 1998, Wu 1999, Guo et al. 2000, Gould 2002, Ma et al. 2004, and Liu et al. 2009). The findings of these studies have been varied and are becoming 'dated'. 2 The rapid changes in food consumption in recent years, resulting chiefly from increased consumer income, has led to researchers putting the case that parameters derived using 'old' data is inadequate for understanding China's current food consumption. ...
This study provides an overview of Chinese meat consumption based on literature review. China, having the largest mid-income population, has become the world's largest meat consumer. Its per capita meat consumption has been growing fast over the past decades to 49 kg, half of that of the US. Chinese consumers are aware of the environmental, health and animal welfare concerns, and can accept plant-based and lab cultured meats. Their adoption rate of these meat alternatives is low and their willingness-to-pay for them is also low from 5% below to 5% above conventional meat, compatible to the level in the US and EU countries. China, as an emerging economy, takes it as a serious challenge for food and nutrition security, where meat plays an indispensable role. Malnutrition still exists among children and the low-income population due to low meat intake. Government is playing an active role in boosting its domestic meat production to meet its market demand for more meat.
A STUDY ON PRODUCTION AND MARKETING OF
PAPAD IN MADURAI DISTRICT OF TAMILNADU
The low consumption of animal protein food is one of the causes of the increasing number of stunting in Indonesia. This study analyzes the effect of changes in prices and incomes on demand for five animal food groups, namely fish, chicken, beef, eggs, and milk. The demand function approach uses the Almost Ideal Demand System model with the parameter estimates using Seemingly Unrelated Regression. The research data using 124,513 households from Indonesian National Socio-economics Survey in 2016. The results showed that beef was the most elastic animal food among all animal foods with a demand elasticity of 1,031%, followed by chicken meat (0.564%), milk (0.451%), eggs (0.313%), and sea fish (0.151%). Beef is a luxury item. Beef is substituted with sea fish, eggs, or chicken meat. Beef is complementary to milk. The increase in beef prices is one of the policies that need to be considered so that the target of protein consumption is immediately reached.
This study provides an empirical analysis of the impact of changes in income distribution on food demand in China using data from China Health and Nutrition Survey. A new parametric form of an inverse demand system is introduced and estimated taking into account reported zero consumption. This new form is a natural extension of recent works that accommodate the incorporation of income distribution into the system and imposition of global regularity conditions in estimation. Our results generally indicate that the distribution of households across income groups is important in determining food demand in China and that a movement towards a more equal income distribution in China will stimulate the demand for vegetable, fruit, fish and eggs.
A complete demand system is estimated separately for urban and rural residents using a two‐stage almost ideal demand system–quadratic almost ideal demand system model and pooled provincial and time‐series data from 2000 to 2012. The estimated demand elasticities with respect to income and demographic variables are then used to predict the changes in the structure of food demand in China for the year 2030. Results of this study suggest that, as per capita incomes grow further while both urbanization and population aging continue their upward trends, the shares of expenditures on foods away from home are expected to rise while the shares of spending on foods at home would decline, and that at‐home food budget shares of grains are expected to continue decreasing whereas at‐home food budget shares of foods with animal origins and fruits would be on the rise. Thus, food security in China has been transformed into feed grain security.
Purpose
The purpose of this paper is to offer an overview of dietary transition patterns and a discussion of the food-related health issues in China.
Design/methodology/approach
The paper builds on a review of the existing literature on food consumption and diet changes in China, and highlights with specific attention to increasing food consumed away from home, the rising demand for fast and processed foods, and the popularizing of western-style foods in Chinese diets.
Findings
China’s food consumption patterns rapidly transitioned from one in which grains and vegetables dominated to one having more animal products and more diversification. More foods are consumed away from home and in the form of fast and processed. Income growth played and will continue to play a critical role in shifting the structure of food consumption. On the other hand, China is on a fast track from a lean population to one in which being overweight or obese. The associations between health outputs and food transitions, however, are inconclusive.
Originality/value
The main findings of this study have implications for better understanding the key trends and driving forces of China’s food demand system. Moreover, the results from this review are essential for food-related policymaking in many emerging economies where coexistence of undernutrition, deficiency of micronutrients and overweight and obesity is a common challenge to the society and individual households.
Purpose
The purpose of this paper is to review the theoretical background, methodological extensions, and empirical applications of the Engel curve, which is applied to the research of the change in farmers’ welfare and food demand in China after the economic reform in 1978, compared with the statistics of income and food consumption.
Design/methodology/approach
This paper mainly uses the traditional method of Engel curve, which is compared with income growth and food consumption, to study farmers’ welfare improvement in rural China.
Findings
The Engel coefficients identify three different stages for farmers’ welfare change after 1978. The first stage is the period between 1978 and 1988, in which farmers’ welfare has been continuously enhanced due to the institutional bonus of the 1978 economic reform and increased government purchase price of agricultural products. The second stage is the period between 1989 and 1995, in which farmers’ welfare has been slightly deteriorated mainly due to the end of institutional reform bonus, suppressed food prices, relative high inflation, and instable political situation. The third stage is the period after 1995, in which farmers’ welfare returns to a growing path, as the dual price system was abolished, the transition from a planned economy to a market economy had been completed, and the government carried out protective policies for agriculture and started to heavily subsidize agriculture. The Engel coefficient still remained at a very high level at 0.59 in 1995, but it continuously decreased to 0.33 in 2015. The welfare enhancement for farmers mainly results from deepened market-oriented reform, protective policies for agriculture, and prevalent off-farm employment. The Engel coefficient is also linked to food demand elasticities. Along with the decreasing Engel coefficient in the past 40 years, income elasticities also continuously decrease from 0.55 in 1978 to 0.08 in 2015. Food demand is very inelastic now, and any further increase in income will not substantially increase food demand any more.
Research limitations/implications
Inequality has not been analyzed.
Originality/value
This paper reviews the methodological advantages of the Engel curves, and uses it to identify different stages of welfare change and estimate income elasticities of food demand for farmers in China after the 1978 economic reform.
China's food supply and demand have significant implications for both China's own national food security and that of the world. This study reviews China's food security prospects and their implications, focusing on international trade in the coming decade. The results show that China's policies for ensuring food security will be enhanced and China will move to sustainable agriculture. Most studies anticipate that China will increase its food and feed imports in the coming decade. China's overall food self-sufficiency is likely to fall from 94.5% in 2015 to around 91% by 2025. The greatest increases in imports are likely to be soybean, maize, sugar, and dairy products. However, within the production capacity of the major exporting countries and of many food-importing developing countries, China's additional imports of 3 to 5% of its total food consumption in the coming decade are unlikely to threaten global food security. Indeed, the projected imports of feed and several foods could provide opportunities for many exporting countries to expand their production and save global resources.
Understanding the rapidly rising demand for energy in China is essential to efforts to reduce the country's energy use and environmental damage. In response to rising incomes and changing prices and demographics, household use of various fuels, electricity and gasoline has changed dramatically in China. In this paper, we estimate both income and price elasticities for various energy types using Chinese urban household micro-data collected by National bureau of Statistics, by applying a two-stage budgeting AIDS model.We find that total energy is price and income inelastic for all income groups after accounting for demographic and regional effects. Our estimated electricity price elasticity ranges from -0.49 to -0.57, gas price elasticity ranges from -0.46 to -0.94, and gasoline price elasticity ranges from -0.85 to -0.94. Income elasticity for various energy types range from 0.57 to 0.94. Demand for coal is most price and income elastic among the poor, whereas gasoline demand is elastic for the rich.
Food is a basic human right and democratic regimes are associated with upholding human rights as well as ensuring food security. Given that meat consumption can be regarded as a proxy for dietary quality, this study sheds light on the link between meat consumption and democratic governance using a cross-national panel dataset for 125 countries covering the period from 1972 to 2013. Employing a two-stage demand system, we find that democracy is positively correlated with meat consumption (including bovine, poultry, pig, and mutton and goat meat). A one unit improvement in democracy score, as measured by Freedom House, increases per capita total meat consumption by 3.57%. Furthermore, our results show that the effect varies according to meat product. In particular, a one unit qualitative improvement in democracy score increases the consumption of bovine, pig, poultry, and mutton and goat meat by 2.9%, 2.5%, 3.8% and 3.2% respectively.
A recent demand system (AIDS) is extended to include family size explicitly and, then, estimated on Indian budget data. The estimation, using non-linear FIML, is performed, first, on pure time series and, then, on pooled cross section data. Within and across equation restrictions are imposed and tested. The principal results include:(a)significant price and family size effects on the budget share of an item,(b)sensitivity of test results on homogeneity and symmetry to (i) rural/urban data, (ii) time series/cross section and (iii) inclusion/omission of family size,(c)considerable difference between pure time series and pooled cross section estimates, and(d)difference between the expenditure responses of the rural and urban consumer.
The analysis is based on a matrix of price and income elasticities that must be income-strata-specific. Obtaining this for aggregated income classes requires a blend of complex theory and sophisticated econometric analysis that is only possible with restrictive assumptions about the separability of the impact of price changes for one commodity class on changes in demand for other commodity groups. The separability assumptions are not overly restrictive for such highly aggregated commodities as food, housing, or clothing. But when important nutritional effects occur due to substition , then the level of commodity detail needed to reproduce accurately the impact of relative price changes forecloses the 'econometric" approach even for combined income classes. Obtaining the full matrix for disaggregated income classes requires a new approach and this paper reports one attempt. -Authors income elasticities income strata specific econometric analysis aggregated commodities disaggregated income classes
China's economy has undergone fundamental changes since 1978. Agriculture, industry and services are being transformed into market economies. Marketing and domestic trade have also been reformed to take into account regional comparative advantages. The government, however, still controls input supply and output procurement to some extent. China is currently negotiating with the GATT in regard to gaining membership. Conditions for China's reentering the GATT are to eliminate the government interventions on domestic production and consumption, and international trade. This may affect China's comparative advantages in international markets, and therefore may result in changes in the structure of imports and exports. Will China continue to export rice or will it start to import rice under free trade, and if China continues to export, how much will China export? This paper attempts to model the potential effects of eliminating all government interventions on China's rice sector. We construct a rice industry model to facilitate our analysis. The model has three components, i.e., supply, demand, and price linkages. The estimated results are consistent with theory and are evaluated using several techniques. Results from model validation indicate that both static and dynamic models are reasonable and can be used to simulate effects of various government policies. Simulations are conducted to project China's rice economy to the year 2000. Two scenarios are compared: (1) continued current policy and (2) elimination of all government interventions. Eliminating all government interventions would increase production, stocks, and exports. Domestic consumption would decline due to the higher domestic prices from eliminating government subsidies on rice consumption. China would export more than 1.6 million metric tonnes of milled rice if there were no government interventions in the year 2000.
The recent rural reforms in China have had great effects on agricultural production and productivity as well as rural household consumption. While much has been written on production and productivity effects of these reforms, very few Chinese studies have attempted to analyze the changes in rural consumption patterns. This paper uses a dynamic AIDS model to estimate various food demand parameters for Chinese rural households using rural household survey data recently released by the China State Statistical Bureau. The results show that all important food commodities including rice, wheat, coarse grains, vegetables, meat, tobacco and alcohol have positive expenditure elasticities. Rice, wheat and coarse grains are necessities, while meat, vegetables, alcohol and tobacco are luxuries. The expenditure elasticities for rice, coarse grains and tobacco are declining, but those for wheat, meat, vegetables and alcohol are increasing. As per capita income rises and population increases, the demand for these items will continue to increase. Therefore, China must continue to increase its food production by a greater rate in the future in order to avoid food shortages.
China is a country of over a billion consumers with an average household income forecast to grow between 3% and 6% per year between now and the year 2000. If achieved, this growth will have important implications for world trade and particularly for agriculture. In this paper a linear expenditure system is applied to Chinese data on urban and rural households which allows the relevant elasticities to be estimated and for some tentative conclusions regarding future trends in consumer demand to be made. -from Authors
In this paper, we consider a three-stage game in the context of a competing exporters model to compare and contrast the effects of discriminatory and uniform (Most Favored Nation, MFN) tariffs on countries' choice over environmental standards for varying degrees of pollution spillovers. Because of the presence of punishment effects and stronger own and cross-tariff effects, we find that discrimination yields higher standards than MFN (and free trade) independently of the extent of pollution spillovers. When pollution is local and incentives to free ride on other countries' abatement efforts are weak, we show, however, that welfare is larger under MFN than under discrimination. In a dynamic setting, we consider the impact of symmetric and asymmetric treatments on the sustainability of an international environmental agreement (IEA) and obtain that multilateral cooperation is easier to sustain under discrimination than under MFN (or free trade).
The authors examine the effects of male and female labor supply on household demands and present a simple and robust test for the separability of demands from labor supply. Using data on individual households from six years of the U.K. Family Expenditure Survey, they estimate a demand system for seven goods that includes hours and participation dummies as conditioning variables. Allowance is made for the possible endogeneity of theses conditioning labor-supply variables. The authors find that separability is rejected. Furthermore, they present evidence that ignoring labor supply leads to bias in the parameter estimates. Copyright 1991 by The Econometric Society.