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The Almost Ideal Demand System
Abstract
Ever since Richard Stone (1954) first estimated a system of demand equations derived explicitly from consumer theory, there has been a continuing search for alternative specifications and functional forms. Many models have been proposed, but perhaps the most important in current use, apart from the original linear expendi- ture system, are the Rotterdam model (see Henri Theil, 1965, 1976; Anton Barten) and the translog model (see Laurits Christensen, Dale Jorgenson, and Lawrence Lau; Jorgen- son and Lau). Both of these models have been extensively estimated and have, in addition, been used to test the homogeneity and symmetry restrictions of demand the- ory. In this paper, we propose and estimate a new model which is of comparable gener- ality to the Rotterdam and translog models but which has considerable advantages over both. Our model, which we call the Almost Ideal Demand System (AIDS), gives an ar- bitrary first-order approximation to any de- mand system; it satisfies the axioms of choice exactly; it aggregates perfectly over consumers without invoking parallel linear Engel curves; it has a functional form which is consistent with known household-budget data; it is simple to estimate, largely avoid- ing the need for non-linear estimation; and it can be used to test the restrictions of homogeneity and symmetry through linear restrictions on fixed parameters. Although many of these desirable properties are possessed by one or other of the Rotterdam or translog models, neither possesses all of them simultaneously. In Section I of the paper, we discuss the theoretical specification of the AIDS and justify the claims in the previous paragraph. In Section II, the model is estimated on postwar British data and we use our results to test the homogeneity and symmetry re- strictions. Our results are consistent with earlier findings in that both sets of restric- tions are decisively rejected. We also find that imposition of homogeneity generates positive serial correlation in the errors of those equations which reject the restrictions most strongly; this suggests that the now standard rejection of homogeneity in de- mand analysis may be due to insufficient attention to the dynamic aspects of con- sumer behavior. Finally, in Section III, we offer a summary and conclusions. We be- lieve that the results of this paper suggest that the AIDS is to be recommended as a vehicle for testing, extending, and improving conventional demand analysis. This does not imply that the system, particularly in its simple static form, is to be regarded as a fully satisfactory explanation of consumers' behavior. Indeed, by proposing a demand system which is superior to its predecessors, we hope to be able to reveal more clearly the problems and potential solutions asso- ciated with the usual approach. I. Specification of the AIDS
... The Almost Ideal Demand System (AIDS) developed by Deaton and Muelbauer in 1980 is used in this study. The AIDS model has advantages compared to previous demand systems such as the Linear Expenditure System, the Rotterdam model and the Translog [16]. ...
... The main advantages of the AIDS model are: i) it makes a first-order and arbitrary approximation for all demand systems, satisfying all axioms of exact choices and perfectly aggregating all consumers, admitting that market demands are derived from decisions of a representative rational consumer; ii) it dispenses with the invocation of the parallelism of Engel curves, thus constituting a great advance in the estimation of flexible functional forms; (iii) it complies with the axioms of consumer choice; (iv) it allows symmetry and homogeneity hypotheses to be estimated or tested and, above all, (v) it is flexible, that is, it has the capacity to accommodate any pattern of substitution between products [4,5,6,16,53,47,56]. ...
... Source differentiation is important in import demand analysis. The specification of the Almost Ideal Demand System (AIDS) model starts with a specific class of preferences that allow exact aggregation of consumers [16,12]. This model represents market demands as a reflection of the decisions of a representative and rational consumer, whose preferences constitute the so-called Price Independent Generalized Logarithmic -PIGLOG, and are represented by an expenditure function that defines the minimum expenditure necessary to reach a level of utility for certain prices. ...
Rice plays an important role in the food and nutrition security of the Mozambican population and has been importing rice to meet growing consumption needs. There are several studies regarding demand of imported rice worldwide. However, it is noted that despite the importance of imported rice in national consumption, the empirical and quantitative studies on the demand for imported rice in Mozambique are scarce. This study results from the need to contribute to filling the information gap by providing the quantification of the impact of income and price on the consumption of imported rice. Based on monthly rice import data from 2011 to 2020, obtained from INE, the Source Differentiated Almost Ideal Demand System (SDAIDS) model and the Seemingly Unrelated Rules (SUR) approach are applied to estimate demand systems for imported rice. The period was chosen due to availability of data. The results of this study show that the national production of rice still does not cover internal needs, so the country resorts to imports to fill the deficit. The elasticities of demand for rice imported into Mozambique show that all income elasticities of demand are statistically significant, except for "other countries" or Rest of the World. The results also show that when income increases by 1%, the demand for rice increases by 1.2% when coming from "Pakistan", and by 1.1% when coming from "Singapore", by 1.03% for "Vietnam"; and in for those from "Myanmar" (1.1%), which suggests that rice from these countries can be classified in the luxury goods category. The results also illustrate that when the price increases by 1%, the quantities demanded decrease, on average, by 1.06% for rice coming from "Pakistan"; by 1.06% for those from "Singapore"; 1.22% for those from "Myanmar"; 0.96% for those from "Vietnam"; by 0.89% for "India"; by 0.79% for "China"; in 0.974% for "Thailand" and in 0.56% for those coming from "other countries". The low levels of production and productivity show that it is still a challenge to guarantee rice self-sufficiency in Mozambique, and efforts to improve supply must continue, since the country's dependence on imported rice can potentially create conditions of vulnerability and insecurity and adverse market effects have competitive advantages.
... The empirical analysis uses a quadratic AIDS (almost ideal demand system) model of energy demand in Mexican households. Ref. [14] combined the Translog and Rotterdam models in the almost ideal demand system (AIDS), which together improve the properties, including the arbitrary approximation for any demand system to the first order, where the information from consumers is added and the homogeneity and symmetry restrictions are tested [15]. ...
... The AIDS model, originally introduced by [14] has been widely adopted in estimating demand elasticities and energy demand systems [22][23][24][25]. On the other hand, Ref. [26] presents a generalisation of the QUAIDS model. ...
... and b(p) is the Cobb-Douglas price aggregator. From Equation (1), it can be seen that the significance of parameter λ i indicates that residential spending should be analysed using a QUAIDS model; otherwise, the AIDS model of [14] is the most suitable. As mentioned, one of the advantages of the QUAIDS model is that its functional form considers the rational behaviour of a consumer. ...
The demand for different energy goods and services is a fundamental component in a country’s economic structure for development. Understanding it is vital in designing economic policies, such as taxes, that can improve the welfare of the population. A comprehension of the distributional effects of elasticities and the application of them to simulate household responses to price changes, as well as a calculation of the welfare impacts on poor and rich households in Mexico, should inform policy design. This paper uses the Household Income and Expenditure Survey (ENIGH) from 1996 to 2018 to estimate the demand of Mexican households for fuels, specifically electricity, liquefied petroleum gas, and gasoline. A Quasi Ideal Quadratic Demand System (QUAIDS) is employed to analyse the effects of removing energy subsidies and introducing a carbon tax. The results indicate that welfare losses would be regressive concerning electricity price increases, while changes in gasoline prices would be progressive. Redistributing the tax revenues accrued by removing energy subsidies and imposing the carbon tax would have more progressive effects on the economy of Mexican households, with welfare gains of up to 350% for the poorest households in the case of electricity consumption taxes.
... Therefore, there have been studies that attempt to combine limited information about individual data (e.g., income distribution, age of household head, number of household members, and residential area) that are available publicly with aggregate data. For example, Berndt, et al. [37] use aggregated data to estimate a demand function but incorporate the probability density function of individual income in the model. Deaton and Muellbauer [38] add a variable representing household heterogeneity to an aggregate demand function. ...
... Our study estimates the aggregation bias empirically using simulated data and, following Berndt, et al. [37] and Stoker [40], shows how bias reduction approaches can be applied for market power estimation models. To the best of our knowledge, no studies have applied these approaches when estimating market power exertion using the NEIO models. ...
... However, the firm-level data are rarely available, particularly for public use. Therefore, there have been various attempts to reduce aggregation bias in estimating consumer demand, mostly by incorporating limited individual micro data into aggregate models; these models are considered hybrid models [37,38,40,48]. For example, Berndt, et al. [37], Deaton and Muellbauer [38], and Deaton and Muellbauer [48] introduce hybrid approaches that directly incorporate limited individual-level micro data or distribution information into aggregate demand equations. ...
This study investigates data aggregation bias in estimating market power in the U.S. beef packing industry using New Empirical Industrial Organization (NEIO) models and shows empirical procedures that can alleviate the bias. Unlike many earlier studies in estimating market power exertion, our study examines the data aggregation bias when market-level data are used in place of firm-level data and show how the bias could be reduced. We first derive data aggregation bias analytically, then empirically investigate the aggregation bias by estimating both firm and aggregate industry models. Because the firm-level data are not available, we use simulated data generated from the Monte Carlo simulation method. Hybrid models, combining limited firm-level data with aggregate data, are also estimated to illustrate how the aggregation bias could be reduced. Our results show that aggregate models with industry-level data tend to underestimate market power exertion in the U.S. beef packing industry, and the aggregation bias is statistically significant at the 1% level. Comparing results from hybrid models with firm-level estimates, we find that hybrid models reduce the bias but do not remove the aggregation bias significantly. The sensitivity analysis shows that market power estimate and aggregation bias are sensitive to functional forms.
... Considering the quadratic extension of Deaton and Muellbauer's (1980) AIDS. The QUAIDS, which was introduced by the Banks, Blundell, and Lewbel (1997), the budget share on good = 1, … . ...
... DeMello and Nell (2005) examined the forecasting performance of static AIDS against three VAR models. However, this study employs a different analytical framework using a cointegrated VAR approach in dynamic LAIDS models.Faculty of Management Studies, Sabaragamuwa University of Sri LankaGiven the theoretical advantages of AIDS in examining substitution effects, this method is particularly well-suited for analysing destination competitiveness.Developed byDeaton and Muellbauer in 1980, the Almost Ideal Demand System (AIDS) model presents a novel technique for analysing tourism demand. Unlike singleequation econometric models, AIDS employs a system-of-equations approach, utilising neighbouring destinations as source markets and tourism expenditure shares as dependent variables. ...
... Deaton and Muellbauer (1980) suggest approximating the price index P by the Stone geometric price index:ln * = ∑ lnThis linear approximation is all the better if there is collinearity in the prices over time.The equation to be estimated is thus: and = ∅ * is the approximation to P. The linear approximate AIDS should be estimated as a system of equations with the abovementioned restrictions on the parameter estimates. The price and income elasticities can be derived from the parameter estimates as:The AIDS implies a money flexibility value of minus one(Blanciforti et al., 1986) ...
The paper analyses the tourism demand and its economic determinants for effective management within the tourism sector. Utilising the Almost Ideal Demand System (AIDS), the study aims to estimate tourism expenditure and price responsiveness elasticities. The model employs data from 1995 to 2019, focusing on total share, total expenditure share, and total expenditure share per item. The findings reveal that Sri Lanka emerges as a destination with typical demand characteristics, showcasing a notably higher demand for tourism. Analysis of spending elasticities, both in terms of own and cross prices, underscores the country's favourable position within the tourism market. Specifically, the results indicate that the demand for tourism in Sri Lanka is sensitive to pricing dynamics, with elasticity values suggesting a significant response of tourist demand to price fluctuations. Understanding Sri Lanka's competitive position relative to other destinations underscores the importance of tailoring management strategies to suit the unique demand characteristics of each country. Given the price sensitivity observed within Sri Lanka's tourism demand, careful attention to pricing mechanisms is imperative for sustaining and enhancing the country's tourism sector.
... The results suggest a higher elasticity in households with a higher level of consumption (income proxy). These estimates use the methodology developed by Deaton [17,18] but limit the definition of clusters to the number of parishes and do not consider other relevant population disaggregation that could contribute to the definition of public policies prioritizing populations with higher risk levels. ...
... Elasticities are estimated by applying the Almost Ideal Demand System (AIDS) proposed by Deaton and Muellbauer (1980) [17] and the adjusted model proposed by Deaton (1988) [18]. ...
... Elasticities are estimated by applying the Almost Ideal Demand System (AIDS) proposed by Deaton and Muellbauer (1980) [17] and the adjusted model proposed by Deaton (1988) [18]. ...
Smoking is a worldwide epidemic and increased prices are one of the most cost-effective measures to reduce tobacco consumption. This article aims to estimate the price and income elasticity of cigarettes for different population groups in Ecuador. The National Survey of Urban and Rural Household Income and Expenditures (ENIGHUR) 2011–2012 was used, which has information on household cigarette consumption and its sociodemographic characteristics. Deaton’s Almost Ideal Demand System, which decouples the effect of quality on the price of the good, was applied. The elasticities were calculated for several groups: urban/rural, income levels (tertiles), education level, sex and age ranges of the household head, and frequency of cigarette purchases in households. The estimated price elasticity nationwide is -0.89 and the income elasticity is 0.41, both statistically significant. Households headed by women (-2.22) are more sensitive to an increase in cigarette prices than those headed by men (-0.65) and households headed by people between 20 and 40 years of age (-2.32) have a higher price elasticity compared to country-level estimations. Differences within other groups are not statistically significant.
... Four flexible demand systems have received considerable attention in the literature since their relative empirical worthiness. They are the Linear Expenditure System (LES) developed by Stone (1954), the transcendental utility logarithmic function (translog) proposed by Christensenet al.(1975), the Almost Ideal Demand System (AIDS) developed by Deaton and Muellbauer (1980), and the Quadratic Almost Ideal Demand System (QUAIDS) of Bankset al. (1997). In our empirical analysis, we employ the QUAIDS model which is based upon the AIDS model. ...
... The insignificance of the squared-log wealth does not permit foreign reserves to be luxuries at some wealth levels but necessities at others. Hence, we re-run the AIDS model (Deaton and Muellbauer, 1980), by removing the squared-log wealth. The results show that most coefficients of estimates are statistically much better. ...
... Different from the previous studies, the four reserves are assessed using a system-wide approach to consumption economics. The Almost Ideal Demand Systemproposed by Deaton and Muellbauer (1980) combined by Engle and Granger's (1987) two-steps Error Correction Model is employed to test whether the conventional theory of demand holds. Applying on the monthly data during 2010-2020 in the case of Indonesia, we find that the basic theory of demand behaviour is generally acceptable. ...
The foreign reserves sufficiency is important to maintain macroeconomic stability. The main objective of this paper is to model the behaviour of the central bank in accumulating the foreign reserves in the case of Indonesia. Unlike the previous empirical studies, this paper disaggregates the components of foreign reserves into foreign currency, securities, gold, and special drawing rights. This paper relies on the Almost Ideal Demand System combined with the Error Correction Model. The estimation result for monthly data over the period 2010(1)-2020(12) reveals that the own-price coefficients are negative and statistically significant which is consistent with the standard theory of demand. While the foreign currency-securities pairwise is substitutive, the foreign currency-gold and the foreign currency-special drawing rights pairwise are complementary or even independent. However, the wealth effect is inelastic except for securities reserves. These results imply that the central bank of Indonesia can re-balance its reserves. The securities holding which have the highest proportion of foreign reserve scan be switched to foreign currency, gold, and/or special drawing rights. The rebalancing measures would remain having an optimal level of foreign reserves holding in terms of its opportunity cost. Therefore, the monetary authority can conduct a further macroeconomic stabilisation without substantially losing the returns.
... To analyze meat consumption trends across Canadian provinces and measure consumption disparities between them, several extensions of the Almost Ideal Demand System (AIDS) specified by (Deaton & Muellbauer, 1980a, 1980b, the most popular of all demand systems, have been run for testing specification against Canadian weekly retails price and quantity data collected between August 24, 2019, to August 13, 2022 for four meats (Lamb, Beef, Pork and Poultry). Testing specification and Consistency analysis lead to the selection the most reliable extension of the generalized AIDS model to carry out estimations across each province using "Iterative Linear Least Squares Estimator" (ILLE) estimation Method provided by micEconAids packages (Henningsen, 2017) and available in R studio (Core Team R, 2018). ...
... The series of demand functional forms specification starts with the linear expenditure systems (LES) specified by Stone (Stone, 1954). The Rotterdam models (Barten, 1964;Theil, 1965;Theil, 1976) and then the translog model (Christensen et al., 1975) have followed and have been used until the specification of the Almost Ideal Demand System (AIDS) by (Deaton & Muellbauer, 1980a, 1980b which has considerable advantages over the Rotterdam and translog models. AIDS was extended to its Quadratic form named the Quadratic Almost Ideal Demand System, QUAIDS (Banks et al., 1997;Poi, 2012). ...
... Since the specification of the Almost Ideal Demand System (AIDS) (Deaton & Muellbauer, 1980a, 1980b and its Quadratic extension QUAIDS (Banks et al., 1997;Poi, 2012), they are the most popular demand estimation models used for empirical demand analysis. The Almost Ideal Demand System AIDS model (Deaton & Muellbauer, 1980a, 1980b) starts from a cost or expenditure function known as the PIGLOG ("Price Invariant Generalized Logarithmic") represented via the cost or expenditure function which defines the minimum expenditure necessary to attain a specific utility level at given prices. ...
This paper investigates the demand for lamb, beef, pork, and poultry in Canada, both at the national level and in disaggregated provinces, to identify meat consumption patterns in different provinces. Meat consumption plays a significant role in Canada’s economy and is an important source of calories for the population. However, meat demand faces several consumption challenges due to logistic constraints, as a significant portion of the supply is imported from other countries. Therefore, there is a need for a better understanding of the causal relationships underlying lamb, beef, pork, and poultry consumption in Canada. Until recently, there have been no attempts to estimate meat consumption at the provincial level in Canada. Different Almost Ideal Demand System (AIDS) models have been applied for testing specifications to circumvent several econometric and theoretical problems. In particular, generalized AIDS and its Quadratic extension QUAIDS methods have been estimated across each province using the Iterative Linear Least Squares Estimator (ILLE) estimation Method. Weekly retail meat consumption price and quantity data from 2019 to 2022 have been used for Canada and for each province namely Quebec, Maritime provinces (New Brunswick, Nova Scotia, and Prince Edward Island), Ontario, total West (Yukon, Northwest Territory and Nunavut), Alberta, Manitoba-Saskatchewan and Manitoba as well as British Columbia. Consistent coefficients and demand elasticities estimates reveal patterns of substitution and/or complementarity between the four categories of meat. Meat consumption patterns differ across each province. Results show that the demand for the four categories of meat is responsive to price changes. Overall, lamb expenditure was found to be elastic and thus considered a luxury good during the study period, while the other three categories are considered normal goods across Canada.
... A well-known method is the Almost Ideal Demand System (AIDS) proposed by Deaton and Muellbauer in 1980. This system helps us understand how changes in the price of items like food or clothing influence what people decide to buy which then feeds into the broader consequences of the price changes on people's welfare. ...
... A well-known method is the Almost Ideal Demand System (AIDS) proposed by Deaton and Muellbauer in 1980. This system helps us understand how changes in the price of items like food or clothing influence what people decide to buy which then feeds into the broader consequences of the price changes on people's welfare. ...
... negative cross-price elasticities), i.e. they indicate what products a consumer is likely to exchange for another. The demand system is based on the Almost Ideal Demand System (AIDS; Deaton & Muellbauer (1980)). This model analyses consumer behaviour in a hierarchical system covering four levels. ...
... We analyse the results from a newly constructed demand system estimated by the use of the Almost Ideal Demand System model (AIDS model by Deaton & Muellbauer, 1980). Originally, the demand system was constructed for the project Economic policy instruments to reduce greenhouse gas emissions from the Swedish food sector, funded by Formas. ...
... Despite the definition of the latter is built in terms of cross-price elasticity within demand system of foods, it seems like that positive significant corresponds to complementarity, and negative significant , though we didn't focus on in our analysis, corresponds to substitutability. Actually, in the various disciplines related to food consumptions, estimations of complementarity and substitutability among foods have been conducted applying the method of Almost Ideal Demand System [10,11] and others [12]. ...
Although promoting healthy eating is a policy objective, the controllability of dietary habits remains uncertain. The personal dietary patterns reflect many factors, of which some are relatively controllable for individual, and others are not. In this article, assuming that some sort of information about controllability of dietary habits is contained in the observed pattern of food consumptions, we focused on dietary pattern on its own. We introduced a statistical descriptive model for data on food frequency questionnaire, estimated strength of pairwise linkage between foodstuffs, and grouped foodstuffs by applying community detection to the networks of the estimated inter-food linkages. Those linkages represent co-movement of pairs of foods consumption. Furthermore, we demonstrated an analysis on the relationship between health of mind and dietary habits considering the aspect of controllability of dietary habits. Using an observational study in Japan, we obtained the following results: 115 foodstuffs were divided into 3 groups for both of genders, but the compositions were different by gender; in the analysis of mental health, some stress response items were associated with the dependence on some of those food groupings. As the grouping of foodstuffs based on our estimation depicted the internal structure of dietary habit that a healthy eating policy should regard as constraint, it follows that we should design the policy along the line with that grouping.
... This study uses the QUAIDS analysis model, according to Banks et al. (1997), as an analytical tool for household food consumption. QUAIDS is an extension of the AIDS model Deaton and Muellbauer (1980). According to Banks et al. (1997), the Engel curve is generally nonlinear with respect to income; therefore, a higher term is needed, especially the quadratic term in the AIDS model. ...
Purpose
This study aims to explore the structural changes in food consumption expenditure in Indonesia before and during the COVID-19 pandemic using data from the 2020 and 2021 National Socioeconomic Survey by Statistics Indonesia.
Design/methodology/approach
The quadratic almost-ideal demand system analysis model is used to estimate changes in the share of food consumption and the demand and price elasticity of food commodities in Indonesia. A total of 15 food items are analyzed to determine changes in food consumption expenditure during the COVID-19 pandemic.
Findings
The results of this study show that during the COVID-19 pandemic, there was an increase in the proportion of household expenditure related to the consumption of home-cooked food. Simultaneously, the proportion of expenditure on prepared food significantly decreased.
Practical implications
The pandemic has changed household food consumption in Indonesia. This study recommends that the government ensure the availability of supplies and stability of food prices and provide financial subsidies to maintain food consumption, especially for lower-income communities.
Originality/value
There has yet to be a study on the changes in household food consumption during the COVID-19 pandemic in Indonesia. Therefore, this research provides empirical evidence that there were changes in household food expenditure during the pandemic.
... In assessing the effects tax (subsidy reduction) on demand for inputs, taking into account the behavioral responses of farmers, we estimated the demand of the different categories of inputs on which we sought to evaluate the tax (subsidy reduction). Systematic approach to evaluate demand patterns of microeconomic data, with different expenditure shares on the different categories of inputs under the axioms of choice and consumer behaviour theory, fits within the framework of the Almost Ideal Demand System (AIDS), proposed by [7]. However, the divergence in expenditure shares within the farming systems as a result of different risk bearing capacity of each farmer, limits the AIDS appropriateness to model the behaviour of the farmers, as it relies on strong assumption of linearity in Engel curves [10,37]. ...
... Currently, we have several demand systems that are consistent with the properties required for demand functions under utility maximization or expenditure minimization behavior. This study adopts the linear approximate almost ideal demand system (LAAIDS) developed by Deaton and Muellbauer (1980), which has an advantage in its tractability of empirical estimation. ...
This study introduces the inverse probability weighted regression adjustment (IPWRA) approach to examine the impact of food or cash transfer programs in Ethiopia. The average treatment effects from the IPWRA food demand system estimation show a significantly lower expenditure share of fruits and vegetables and a higher share of animal-based products among assistance beneficiaries than non-beneficiaries. However, the positive, insignificant treatment effect on expenditure share of food away from home is estimated. These findings propose that our concerns should be redefined to elucidate changes in beneficiaries’ menu choice and time allocation by transfers within a workfare program.
... For analysis of data, Linear Approximate Almost Ideal Demand System (LA/AIDS) was used. The LA/AIDS model of Deaton and Muellbauer (1980a) was employed to estimate elasticities of demand. The study assumed three-stage budgeting. ...
The study examined the beef value chain with a view of measuring the elasticities of Demand within the chain.
... P is a price index defined by: However, Deaton and Muellbauer (1980) proposed a LA of the nonlinear AIDS (LA-AIDS) model by specifying a linear price index (Stones price index) given by: ...
There is a general consensus, among marketers, that dealing with competition requires their engagement with customers so as to build strong customer relationships. The purpose of this study is to find factors that influence the demand for various fish species caught and consumed in Malawi. Previous studies treated fish as a homogenous commodity even though there are different species of fish. This study is, therefore, the first to provide a disaggregated analysis of the demand for fish in Malawi employing primary data collected from the households in Blantyre city using a multistage stratified random sampling procedure. Results indicate that all the fish species used in the study, except matemba (Barbus paludinosus), are complementary and normal goods. Policy implications arising from this study are two-fold namely; policymakers need to make sure that people have more income to buy more fish and make sure that the price of fish does not just rise anyhow.
... Under LAIDS, originally proposed by Deaton and Muellbauer (1980), inference on price and expenditure elasticities are subject to restrictions arising from microeconomic theory. The Marshallian price elasticity (PE) of food group i with respect to food group j, ij and the expenditure elasticities for good i, i under the LAIDS are: ...
Increases in the use of Bayesian inference in applied analysis, the complexity of estimated models, and the popularity of efficient Markov chain Monte Carlo (MCMC) inference under conjugate priors have led to more scrutiny regarding the specification of the parameters in prior distributions. Impact of prior parameter assumptions on posterior statistics is commonly investigated in terms of local or pointwise assessments, in the form of derivatives or more often multiple evaluations under a set of alternative prior parameter specifications. This paper expands upon these localized strategies and introduces a new approach based on the graph of posterior statistics over prior parameter regions (sensitivity manifolds) that offers additional measures and graphical assessments of prior parameter dependence. Estimation is based on multiple point evaluations with Gaussian processes, with efficient selection of evaluation points via active learning, and is further complemented with derivative information. The application introduces a strategy to assess prior parameter dependence in a multivariate demand model with a high dimensional prior parameter space, where complex prior-posterior dependence arises from model parameter constraints. The new measures uncover a considerable prior dependence beyond parameters suggested by theory, and reveal novel interactions between the prior parameters and the elasticities.
... This psychological phenomenon assumes a pivotal role in salary management, where individuals may mentally segregate their income into distinct categories, potentially leading to suboptimal financial decisions (Benartzi & Thaler, 2001). For instance, individuals may allocate a substantial portion of their salary to discretionary spending while neglecting critical areas such as savings or debt reduction (Deaton & Muellbauer, 1980). Establishing mental budgets for various expense categories, known as psychological budgeting, further compounds this, as individuals allocate specific percentages of their salary to housing, gifts, or entertainment, fostering a psychological attachment to these budgeted amounts and rendering adjustments to spending patterns challenging (Mankiw & Zeldes, 1991). ...
This research delves into the "seasonal fixed bonus" phenomenon in Mexico, Spain, the United States, and Canada, examining how employees prefer receiving payments during the Christmas season or evenly distributed throughout the year. Two hypotheses explore biases arising from bounded rationality: Hypothesis 1 suggests Mexican/Spanish workers may resist receiving the bonus dispersed throughout the year, while Hypothesis 2 posits American/Canadian workers may resist a reduction in monthly payments for a seasonal bonus. Using a utopic international competition, the study reveals that Mexican/Spanish participants exhibit a preference for end-of-year rewards, partially supporting Hypothesis 1, whereas American/Canadian participants lean towards immediate rewards, partially supporting Hypothesis 2. Statistical significance is found in Mexico and Spain, aligning with mental accounting principles, while the U.S. and Canada show similar trends but lack significance. This implies a potential status quo bias among American and Canadian workers regarding seasonal bonuses.
... A wide range of models have been developed for the estimation of source differentiated import demand systems in applied agricultural economics. However, the Rotterdam (Barten, 1964;Theil, 1965) and the AIDS (Deaton and Muellbauer, 1980) models have become the most popular ones in this field. In the present study, we proposed a general demand system that encompasses the Rotterdam model and the differential version of the linear approximation of AIDS model, and hybrids of these two (Barten, 1993;Brown et al., 1994;Erdil, 2006;Lee et al., 1994). ...
Over the last 25 years, the Latin American beer sector has undergone important changes. The growth in beer production, consumption, and trade has been accompanied by a greater demand for malt and barley produced and traded in the region, displacing other traditional export countries of these inputs. Based on these facts, we studied the long-term relationship between this increase in beer production and the prices of imported inputs. In addition, we estimated the elasticities of demand of imported inputs of the main Latin American brewing countries. This allows us to infer about Latin America's competitive position as a supplier of its own beer inputs.
... Numerous frameworks and guidelines have also aimed to quantify environmental and social resort impacts using sustainability certifications and ecolabels (Eskerod & Đurić, 2018;Reid, Johnston, & Patiar, 2017;Roth, Lewis, & Hancock, 2021;Spenceley, 2018). Quantitative techniques such as statistics, econometrics, artificial intelligence, and complexity science have been applied to further analyze tourists' destination perceptions (Hurley, Moutinho, & Witt, 1998;Nunkoo, Smith, & Ramkissoon, 2013), forecast tourism demand (Deaton & Muellbauer, 1980;George, Osinga, Lavie, & Scott, 2016;Mariani, Baggio, Fuchs, & Höepken, 2018), and model destination structures and dynamics (Baggio, 2017). Visitor preferences and satisfaction with resort selection have additionally been explored through market segmentation (Inbakaran & Jackson, 2005). ...
The study aims to develop a novel approach to assess Tourism Capital in resort areas, specifically Zermatt-Matterhorn, between 2014 and 2021. This approach integrates a two-tiered empirical model, where the first tier involves CNN-based image analysis, and the second tier employs mathematical techniques and time-series social media data to evaluate stakeholder engagement. The research emphasizes how fluctuations in tourism capital are influenced by stakeholder interactions and external events, highlighting the significance of empirical and quantitative approaches in understanding tourism dynamics. The findings underscore the substantial role of stakeholder engagement in shaping overall tourism capital, offering a practical and dynamic tool for tourism analysis and urban planning. This study innovatively assesses Tourism Capital by analyzing Instagram images, offering a more in-depth, data-driven view of tourism development in resorts.
... For the econometric part of our analysis, we start with a system of six equations that can be recovered from an indirect utility function and reflects our basket of six foods (Deaton & Muellbauer, 1980): ...
Since joining the North American Free Trade Agreement, Mexico has increased its meat production and exports and become more dependent on imported feedstuffs such as genetically engineered (GE) corn. Mexico recently banned the use of GE corn in corn‐based foods and called for a gradual substitution away from the use of GE corn for other uses (e.g., feed). This paper considers how a complete ban on GE corn might affect Mexican households using a computable general equilibrium (CGE) model to simulate the impact over the medium run (5 years). Results indicate that Mexico decreases corn imports by 76.9% and increases corn production by 65.6%—an increase that would require 3.3 million hectares more land for corn. The policy leads to a 24.8% increase in Mexico's corn price and up to a 6% increase in the prices of other agricultural products. But Mexico might have difficulty shifting land to corn; as such, we consider an alternative scenario that restricts land movements. We find that impacts are further exacerbated in this scenario—for example, corn prices triple. Our final contribution is to pair these results with a compensating variation calculation based on the almost ideal demand system. We find that Mexican households would need to spend, on average, between 6.7 and 13.9% more on food, depending on the scenario, to compensate for the resulting price escalations. Ultimately, our results show that a move toward greater food sovereignty in Mexico is ultimately borne by consumers via higher food prices.
... This study also uses the AIDS model proposed by Deaton and Muellbauer (1980) to analyze the factors influencing market share among major exporting countries. The estimation method for estimating the coefficients in the AIDS model is carried out using the Seemingly Unrelated Regression (SUR) method, assuming that this approach can assist in understanding the position of coffee-exporting countries in the context of importing countries. ...
... Description: : Comparative advantage of commodity i of a country in country j : Export value of commodity i from a country to country j : Total export value of commodity i from all exporting countries to country j : Total export value of all commodities from a country to country j : Total export value of all commodities from all exporting to country j : Symmetric comparative advantage of commodity i of a country in country j Furthermore, the demand for Indonesian seaweed and other exporting countries in the Chinese market was analyzed using the AIDS model. This model was developed by Deaton & Muellbauer (1980) to analyze the import demand for a particular commodity from a specific importing country. Rifin (2013) stated that the parameter estimation results of the AIDS model could provide an overview of the competition among competing exporting countries in a particular commodity market. ...
China is the largest importer of seaweed globally, and Indonesia is one of the countries that exports seaweed to China. Other exporting countries such as Chile and Peru also supply seaweed to China. This study aims to analyze the competitiveness of Indonesian seaweed (HS 121229) in comparison to seaweed from other exporting countries and to investigate the demand for Indonesian seaweed and other seaweed-exporting countries in the Chinese market. The study utilized export data from exporting countries that supplied China's seaweed requirements between 2012 and 2021. Revealed Symmetric Comparative Advantage (RSCA) and Almost Ideal Demand System (AIDS) were used for data analysis. The findings revealed that Indonesian seaweed (HS 121229) has a comparative advantage in the Chinese market. However, Indonesian seaweed's comparative advantage is still lower than its competitors. The demand for Indonesian seaweed in the Chinese market is inelastic. Therefore, to increase Indonesian seaweed's export income, exports should be increased rather than lowering prices. To reinforce Indonesia's position in the Chinese seaweed market, Indonesia should collaborate with other exporting countries that complement Indonesia's efforts, such as Chile.
... For analysis of data, Linear Approximate Almost Ideal Demand System (LA/AIDS) was used. The LA/AIDS model of Deaton and Muellbauer (1980a) was employed to estimate elasticities of demand. The study assumed three-stage budgeting. ...
Type: Research Full Text: PDF, PHP, HTML, EPUB, MP3 The study examined the beef value chain with a view of measuring the elasticities of demand within the chain. Specifically, price elasticity of demand, cross price elasticity and expenditure elasticity were measured using the LA/AIDS Model. Data for the study were obtained through structured questionnaire administered to buyers of beef and processed beef products which include tsire, balangu and kilishi. A total of 400 respondents were selected through convenience sampling. The results of the study revealed uncompensated own price elasticity of beef was unitary elastic (-0.9664), compensated own price elasticity was inelastic (-0.0526) and expenditure elasticity (1.3752) showed beef was a luxury good. Uncompensated cross price elasticity showed beef was complement with mutton, chevon and camel while compensated cross elasticity showed beef and mutton were complements and beef was substitute to chevon and camel. Uncompensated own price for kilishi was unitary (-0.9755), tsire (-2.6837) and balangu (-3.8467) were elastic while compensated own price for kilishi (-0.0866) was highly inelastic and tsire (-2.4315) and balangu (-3.4834) were elastic. Kilishi (1.4349) and balangu (3.2058) were luxury goods and tsire (0.9439) was a necessary good. Uncompensated cross price elasticity showed kilishi and balangu were substitutes, tsire and kilishi and tsire and balangu were complements while compensated cross price elasticity showed balangu and kilishi were substitutes, balangu and tsire and tsire and kilishi were complements. It was recommended that since the products studied were mostly luxury goods, policy measures geared at ensuring increased incomes such as increased minimum wage and employment creation which would concurrently increase purchasing power of consumers should be exploited.
... Much research has also confirmed the damage of air pollution to people's health, both in the short and long term. To avoid the negative externality induced by air pollution, people's consumption demand and philosophies have changed accordingly (Zhang and Mu 2018), which may yield an unintended impact on economic development and changes in industrial structure (Deaton and Muellbauer 1980). As the international trade environment undergoes deterioration, the role of domestic consumption as an economic driver becomes increasingly prominent, especially in developing countries (Kuhn and Prettner 2018). ...
Increasing air pollution not only affects the population’s health but also changes its consumption structures and patterns. Using China Family Panel Studies, this study investigates the relationship between air pollution and household consumption. The findings reveal that household consumption is considerably affected by air pollution: One standard deviation rise of PM2.5 concentration will decrease the household consumption by 8.7%. Moreover, this effect is irreversible in the short term. What is more, air pollution has significantly changed consumption structure and patterns. Heterogeneous analysis indicates that the influence of air pollution on consumption generates the so-called Matthew Effect, wherein medium and low-income and rural households are exposed to a greater negative effect. Mechanism tests indicate that air pollution may reduce household consumption through three channels: increase negative emotions, decrease outdoor activities, and depress future expectations. The conclusions drawn in this paper enrich our understanding of the economic impact caused by air pollution and bring important significance to the government in promoting the coordination and sustainable development of the environment and economy.
... In the 1970's researchers thoroughly focused on developing a flexible functional form. The transcendental logarithmic (translog) system of [26]; its modified version of [27] and the Almost Ideal Demand System (AIDS) of [28] are among the two models developed for estimating flexible demand systems. The models necessitate approximating direct and indirect utility functions or the cost function with some specific functional form that has enough parameters to be regarded as a reasonable approximation to whatever the true unknown function might be [29]. ...
Background: In spite of Nigeria's huge agricultural and human resources potential, recent reports state that most farming households are on the verge of acute food insecurity. Commonly adduced reasons for the food insecurity status do not accord adequate attention the critical role the demand for nutritious protein by these resource-poor farming households especially those cultivating Underutilised Indigenous Vegetables (UIV) plays. This study therefore examines the nature of demand for protein among the UIV farming households and its implication for food security. Methodology/Principal Findings: The study area was all the six states in the Southwestern part of Nigeria and Kwara state. Primary data was collected in 144 communities among 1089 households. Findings indicate that the majority of the household experience food shortages on a weekly basis. They cope by borrowing money as well as reducing the quality and quantity of food eaten. A Quadratic Almost Ideal Demand System (QUAIDS) model considered proteinous food items which include egg, chicken, pork, fish, milk, beef and bushmeat. Price elasticity of egg is unitary; chicken, pork and bushmeat are elastic; and fish and milk are inelastic. Pork is the most price elastic. Beef exhibits a Veblen effect and its only substitute is the bushmeat. Chicken, milk and fish are inferior goods while egg is a necessity. Sex, age, household size and educational level significantly affect the budget share to protein among the producers. Conclusion/Significance: The study established that poor UIV farming households consider consumption of proteinous food items as a privilege in display of better social status because they (proteinous food items) command higher prices. Others not so privileged farming households seek cheaper alternatives by consuming bush meats and UIVs which thus becomes important in the food security equation.
... The first focuses on the identification of the factors determining tourism flows, initially based on theoretical models, mainly gravity models inspired by international trade theories, then via empirical approaches presented in Li and al [6], Sinclair and Stabler [7] and Stabler et al. [5]. The second, based on a more grounded theoretical base: Static and temporal microeconomic theory of demand, Almost Ideals Demand System model of Deaton and Muellbauer [8], the characteristics approach of Lancaster [9], the discrete choice models of Anas [10], Morley [11], and Alegre and Pou [12] providing a set of explanatory factors for tourism expenditure. Song et al. [13,14] provide a comprehensive review of the theoretical, empirical and methodological literature on the identification of the determinants of tourism attendance. ...
p>The internationally adopted definition of tourism prompts to develop a systemic dynamic approach of tourism development. The paper proposes to conceptualize tourism development as a system interlinking three agents: transport, domestic tourism activities and the visitor; generating three types of development tourism development dynamics. In a second step, it uses this framework to develop, with a minimalist set of hypotheses, a capacity-based model enabling to consider destination tourism development as a microfounded supply-driven systemic dynamic process. Through the lens of the model, exhaustion or asymmetric distribution of market power may halt destination tourism development. Using the model’s framework, the structuring forces of the Tourism Area Life Cycle (TALC) are explained by the dual impact of capacity dynamics: accelerating by increasing arrivals, and at the same time decelerating by declining price elasticities. </p
... It is also noted that while the income data in HILDA relates to the household income in the previous financial year, the household structure used for equivalisation and reporting is that at the time of the survey, with most surveys being conducted in the final months of the calendar year. 22 For some reviews of the literature, and range of scales see Whiteford (1985); Nelson (1993); Deaton and Muellbauer (1980) ;Buhmann et. al (1988); Figini (1998); Gray (2005); Social Metrics Commission (2019); and Dudel, Garbuszus and Schmied (2021). ...
There are many conceptions of what poverty means in contemporary western societies, and an array of ways of seeking to measure its incidence. Data from the Household, Income, and Labour Dynamics Australia (HILDA) survey is used here to consider these issues and analyse trends over the past 21 years to 2022, focusing on the most frequently used measure, relative income poverty, with the poverty line drawn at the 50 per cent of median income level. The rich set of other indicators of wellbeing and deprivation in the HILDA survey are also considered. Over the past two years there has been a marked increase in inequality in Australia, and an increase in measured poverty. More generally the analysis points to extensive disjunctures between measured relative income poverty and other measures of hardship, and the perceptions of people themselves. While there is a tendency for higher levels of adverse outcomes for those identified as being in poverty, generally those identified using relative income poverty measures do not report such occurrences.
... The estimation methods implemented by markets have macroeconomic origins (Fair 1971;Maddala and Nelson 1974), but have found applications in empirical economics and finance research using microdata (see for instance Bulligan, Busetti, Caivano, Cova, Fantino, Locarno, and Rodano 2017;Carbó-Valverde et al. 2009). In this respect, demand estimation methods such as the almost ideal demand systems (AIDS) of Deaton and Muellbauer (1980) and the structural estimation of Berry, Levinsohn, and Pakes (1995), typically abbreviated as BLP, partially overlap with the methods described in this article. The AIDS and BLP methodologies are micro-founded, but they focus only on the demand side and do not concern varying structural assumptions such as the market clearing and short side rules. ...
Market models constitute a significant cornerstone of empirical applications in business, industrial organization, and policymaking macroeconomics. The econometric literature proposes various estimation methods for markets in equilibrium, which entail a market-clearing structural condition, and disequilibrium, which are described based on a structural short-side rule. Nonetheless, maximum likelihood estimations of such models are computationally demanding, and software providing simple, out-of-the-box methods for estimating them is scarce. Therefore, applications rely on project-specific implementations for estimating these models, which hinders research reproducibility and result comparability. This article presents the R package markets, which provides a common interface with generic functionality simplifying the estimation of models for markets in equilibrium and disequilibrium. The package specializes in estimating demanded, supplied, and aggregated market quantities and absolute, normalized, and relative market shortages. Its functionality is exemplified via an empirical application using a classic dataset of United States credit for housing starts. Moreover, the article details the scope and design of the implementation and provides statistical measurements of the computational performance of its estimation functionality gathered via large-scale benchmarking simulations. The markets package is free software distributed under the Expat license as part of the R software ecosystem. It comprises a set of estimation and analysis tools that are not directly available from either alternative R packages or other statistical software projects.
... Finally, commodity prices were assigned to a household based on its interview data. The complete demand system (inclusive of leisure) was approximated using a flexible functional formthe Linear Approximate of Almost Ideal Demand System (LA-AIDS) introduced byDeaton and Muellbauer (1980). The demand equations are approximated by applying the iterated linear least-squares (ILLS) estimation procedure of ...
This study analyzes the potential repercussions of high wheat prices on agriculture household economic and nutritional well-being in Pakistan. This task was accomplished by formulating a theoretical model to capture the economic behavior of agricultural households that produce marketable surpluses of wheat. For empirical verification, eight modules of nationally representative Household Integrated Economic Survey (HIES) were combined with approximate price levels to create a pooled cross-sectional sample of annual price-indices for household expenditure from 2000-01 to 2018-19. The study uses the Linear Approximate of Almost Ideal Demand System (LA-AIDS) model to derive demand elasticities and conduct a comparative static analysis. Finally, the model is extended to assess household nutritional well-being by linking price effects to calorie intake. The empirical findings demonstrated that high wheat prices resulted in high farm revenues for agricultural households. Although wheat consumption has declined, these households have used excess profits to diversify the food basket, which in turn led to an improvement in calorie intake. An indirect spillover effect from changes in wheat prices has also been observed, leading to an increase in demand for domestically produced commodities. Since the overall impact of wheat price increase on agricultural and non-agricultural households is mixed, it is proposed to pursue a careful food security policy to ensure the economic and nutritional well-being of the entire society. This study adopts a two-pronged approach of social to integrating social safety nets that does not hinder agricultural growth to achieve a mutually rewarding outcome.
... 24] and the Almost Ideal Demand System (AIDS) model devised by Deaton and Muellbauer[25]. By developing a dynamic AIDS model, it scrutinizes the habit formation effect for various ...
This study employs panel data and a dynamic Almost Ideal Demand System (AIDS) model to investigate the habit formation effect of food consumption among Chinese rural residents and its consequential impact on nutritional intake. The dataset, spanning from 2012 to 2018, encompasses nine provinces in China and involves 5390 rural households. The findings reveal that, excluding beef, mutton, and poultry, there are significant habit formation effect on the consumption of food categories, notably grains, vegetables, and edible oils. Lower-income and younger demographics demonstrate a more pronounced reliance on established dietary habits. Influenced by the habit formation effect, there is a substantial reduction in the income elasticity differences across various food types. Overlooking the habit formation effect in food consumption would lead to an underestimation of the income elasticity of energy, fat, and carbohydrates. This suggests that, over the long term, food consumption habit formation is a pivotal factor in enabling the enhancement of residents’ dietary structures, amplifying the incremental energy intake associated with income increases, and accelerating the transition towards nutritional surplus. The conclusions drawn from this study offer valuable insights for ensuring food security and nutritional balance. Policy-makers of food and nutrition strategies should duly consider the habit formation effect on residents’ food consumption, and seek to optimize dietary patterns and promote nutritional transformation by food consumption habit intervention.
... Therefore, in this research, the involvement dimension is related to the way in which the tourist plans the trip, i.e., type of accommodation, types of transportation and with the number of people with whom the tourist makes the trip and the relationships between them (Ozdemir et al., 2012). Similarly, the allocation of the main tourist expenditures to different travel-associated expenses and the total expenditure per day and per tourist (Deaton and Muellbauer, 1980) can also represent the way in which a tourist plans a trip. Therefore, four hypotheses can be postulated: ...
Depopulation is currently a major problem in Spain, especially in inland areas. Tourism can help alleviate this problem. Therefore, competitive advantages must be enhanced by developing a capable and sustainable tourism model that can lead to the desired level of development in a given geographical area. A powerful decision-making and diagnostic tool was created for the tourism industry in the Burgos Province, Spain to identify the key factors in tourist satisfaction, which can influence the decision to recommend and revisit a destination. This study presents this tool and a theoretical model of tourism satisfaction. The findings emphasize the significance of the perception that tourists have of the quality of a destination's goods and services and its impact on satisfaction. Enhancing tourist satisfaction can have important implications for improving tourism management and, consequently, addressing the depopulation problem.
This paper employs a comprehensive methodology that integrates demand and supply elasticities, performance metrics, and data envelopment analysis to analyze agri‐food supply chains at a macroeconomic level. It utilizes data from a global sample of 53 countries spanning the years 2000 to 2019. The findings from various levels of analysis reveal several key insights: first, Australia or Cameroon should allocate all their food resources to enhance the capacity utilization of their Food Supply Chains (FSC). Second, Ghana or New Zealand may concentrate 100% of their resources on improving the Responsiveness of their FSC. Third, Switzerland, Turkey, and the United States should allocate 100% of their food resources to adjust resource allocation within their FSC. Fourth, for countries like Costa Rica and Canada, the allocation should be 19% to capacity utilization and 81% to resource allocation. Fifth, countries such as Cyprus, the Dominican Republic, Ecuador, and El Salvador should prioritize 12% of inputs for resilience and allocate the remaining 88% to resource allocation. Sixth, for countries like Nicaragua, Niger, Nigeria, Russia, South Korea, Serbia, Senegal, and Singapore, the allocation should be 28% of inputs to responsiveness, with the majority, 72%, directed to resource allocation. Sixth, Nigeria, Ethiopia, and Ghana have better performance across critical variables. This study introduces an innovative framework that facilitates the interaction of agri‐food supply chains with various macroeconomic variables, including GDP, inflation, corruption, food security, and nutrition, opening new avenues for a holistic understanding of these systems.
When reviewing horizontal mergers, antitrust agencies balance anticompetitive incentives, resulting from market power, with procompetitive incentives, created by efficiencies, assuming complete information and static, simultaneous move Nash equilibrium play. These models miss how a merged firm may prefer not to pass through efficiencies when rivals would respond by lowering their prices. We use an asymmetric information model, where rivals do not observe the size of the realized cost efficiency, to investigate how this incentive could affect post‐merger prices. We highlight how the strength of this incentive will depend on the market structure of non‐merging rivals and discuss alternative settings where similar issues arise.
This study is conducted to compare the four different estimation techniques, Ordinary least square, Instrumental Variable, Lewbel (1996) approach and control function approach estimating the quadratic food Engel curve in the presence of the problem of measurement error and the problem of endogeneity of total expenditure. The authors have used the HIES data 2010-11 as it has been observed that the HIES data 2010-11 fits a quadratic shape of food Engel curve in Pakistani context. Moreover, the expenditure elasticity of food demand was observed between zero and one which indicates the fact that food is a necessary good for Pakistani households. The results also shows that endogeneity of total expenditure is more serious issue than the measurement error.
Root and tuber crops consisting of cassava, sweet potato, potato, taro and others root and tubers have the important roles as the source of food, nutrition and cash income for many farmers in Indonesia. These crops also as a source of carbohydrates beside rice, corn, cereals, wheat etc. Root and tuber crops are the second most important group of crop plants after the cereals. The government of Indonesia accelerate food diversification based on local food resources, especially facing the climate change. The objective of this study was to estimate the role of root and tuber crops on food diversification and to estimate the household root and tuber crops demand in East Java Indonesia. The research used SUSENAS (Indonesian National Socio-Economic Survey) 2020 data with 31.990 household respondents in East Java Indonesia. Demand for food was estimated by AIDS (Almost Ideal Demand System) model. The results show that the average consumption for root and tuber crops was 0,69 kg/household/week (11,23% from carbohydrates foods), whereas rice consumption amount 4,86 kg/household/week (79,68 %), maize amount 0,25 kg/household/week (4,13%) and cereals amount 0,3 kg/household/week (4,96%). The expenditure elasticity of root and tuber crops was 1,36, while the expenditure elasticity of rice amount 0,78 (normal food), maize (1,41) and cereals (1,27). The expenditure elasticity more than 1 means that root and tuber crops as a superior food, also for maize and cereals. People no longer considers that root and tuber crops to be an inferior food. The root and tuber crops consumptions have the highest proportion after rice. It can be mean that root and tuber crops have the important role on food diversification in East Java Indonesia. Facing the climate change, root and tuber crops development be a right decision, moreover, root and tuber crops can be planted on dry land which is still widely available in Indonesia.
Indigenous and native chickens play a pivotal role in rural economies, providing income and food security. India is one of the world's top producers of poultry, with a total chicken population of 851.8 million in 2019 and 37.2% representing native or indigenous breeds. In recent years, the rising demand for native chicken meat and government-backed projects in India have led to a shift from traditional backyard chicken raising to semi-intensive and intensive farms, empowering marginalized communities and women. Consumer preferences for native chicken meat in India was examined in this study, employing a two-part model with a logit model and log-normal OLS model to analyse responses from 503 consumers. Additionally, factor analysis revealed nine key factors influencing attitudes. Gender, age, income, education, marital status, cohabitation, household size, the presence of seniors or children, and consumption frequency significantly shaped preferences. Factors such as psychological well-being, affordability, knowledge, nutrition, food quality, fitness, purity, and sustainability had negative effects on preference and quantity purchased. The study reveals a strong consumer preference for native chicken meat, attributed to its organic nature, including traditional farming and sustainable production. To enhance sustainability of semi-intensive and intensive native chicken farming, it is imperative to address pricing disparities and ensure the consistent availability of native chicken meat. Achieving long-term sustainability in native chicken farming requires aligning consumer demand with ethical and environmentally sustainable farming practices.
This study evaluates the impact of a carbon tax on CO2 emissions in Costa Rica. For the above, a demand system is estimated using data from a household expenditure survey, which allows for obtaining the elasticities of demand for various groups of goods focused on energy. Then, the environmental extension of the Leontief price model is implemented to determine the change in prices caused by different carbon tax rates (25, 50, 75, and 100 USD/ton CO2). Subsequently, both models are linked to obtain the variations in production and sectoral emissions. In addition, a Monte Carlo simulation is carried out since the estimated price elasticities have a standard deviation associated with them. The results suggest that carbon taxes mainly affect transportation, while the rest of the sectors have slight impacts in all simulated scenarios. For example, the drop in total CO2 emissions is explained between 89.6% and 91.3% by the decrease in emissions in the passenger transport and other transport sectors with a 95% confidence interval. The previous is explained by the composition of Costa Rica's energy matrix, which has a very high share of renewable energies. Finally, some climate policy options are suggested to contribute to this country's carbon neutrality.
The research reported in this paper examines how changes in liquidity (or flows of financial services from monetary assets) affect commodity prices, levels of consumer expenditures on commodities, and the abilities of consumers in high- and low-income groups in Indonesia to adjust shares of expenditures to optimize their welfare (utility). A dynamic system of demand equations for each income group is specified on the basis of Cooper and McLaren’s (1992) Modified Price-Independent Generalized Logarithmic (MPIGLOG) demand system and Anderson and Blundell’s (1983) disequilibrium adjustment mechanism. A bloc of dynamic price equations is also specified, based on the principle of excess demand adjustment. In the model, income groups adjust their shares of aggregate expenditures on food, housing, and other items to partial-equilibrium levels, given commodity prices and the groups’ respective allocations of aggregate expenditures. Changes in the rate of growth of the supply of base money, determined by Bank Indonesia policy, influence changes in prices and income groups’ commodity expenditure levels, hence, levels of welfare derived from the consumption of commodities. The continuous-time model is estimated with annual time-series data on expenditures, prices, and financial aggregates by a non-linear quasi-Newton-maximum-likelihood procedure. The estimation results suggest that the demand systems for the two income groups studied in Indonesia are different but that adjustments in prices and consumption expenditures of both income groups have been affected by monetary policy. Counterfactual simulations of variations in monetary policy suggest that changes in the historical rate of growth of the money supply would have had discernibly sizable effects, that income groups would have been affected differently, and that increasing rates of growth of money would not have necessarily led to increasing prices for all commodities.
This study estimates demand for 52 chip brands using IRI scanner data. The multinomial logit model addresses dimensionality and endogeneity issues in demand estimation. All brands exhibit elastic demand, with own-price elasticities between -5.0412 and -1.4251, indicating high consumer responsiveness to price changes. Notably, tortilla chip brands are less elastic than potato chip brands. Baked chip brands fall under the category of highly elastic brands. Funyuns has the most elastic demand, while Calidad Triangle has the least elastic demand. Cross-price elasticities (0.0010 to 0.0263), exhibiting the IIA property, indicate that consumers have brand loyalty, as seen by comparisons with own-price elasticities' magnitudes.
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