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What Do We Learn from Consumer Demand Patterns from Micro Data
Abstract
The aim of this paper is to assess the importance of using micro-level data in the econometric analysis of consumer demand. To do this, the authors utilize a time series of repeated cross sections covering some 4,000 households in each of fifteen years. Employing a number of different aggregation procedures, they conclude that aggregate data alone are unlikely to produce reliable estimates of structural price and income coefficients. However, once certain aggregation factors as well as trend and seasonal components are included, an aggregate model is not necessarily outperformed across all demand equations in terms of forecasting ability. Copyright 1993 by American Economic Association.
... Denote the set of fish types on the demand side as DF. For i 2 DF, the following states the quadratic version of the AIDS (Blundell et al., 1993): (1990) suggest a Heckman procedure, which treats unobserved fish consumption as analogous to the sample selection problem. The Heckman procedure corrects for selection bias by running a probit regression to obtain PR h i , the predicted probability that household h consumes fish type i. ...
... The ratios in the symmetry restriction hold owing to the quadratic form of (10), as in Blundell et al. (1993). The foregoing restrictions are imposed during estimation. ...
... A multi-stage budgeting framework that estimates a demand function for total food in the first stage, a demand function for non-vegetarian food in the second stage and fish demand in the third stage were used for estimating the demand elasticity. Following Blundell et al. (1993), the specific functional form used in the three stages are as follows: ...
Trade liberalisation has reduced distortions in the international fish market and created favourable environment to increase fish export. However, the benefits of trade liberalisation could be influenced by introducing the regulatory barriers such as food safety regulations, quality and composition standards, and labeling requirements. Some studies have shown that the Technical Barriers to Trade (TBT), and Sanitary and Phytosanitary (SPS) measures have adversely affected the exports from developing countries. The European Union (EU) import ban on fish and fish products from several countries on the pretext of outbreak of cholera, Australia's ban on the import of salmon, EU import ban on shrimp from Bangladesh and India are some examples of setbacks arising from the application of food safety measures. Nearly 15 per cent of the total fisheries exports in 1996-97 to U.S.A. was lost because of automatic detention by U.S.A. on the ground of poor sanitary conditions (Jha, 202). Thus, the gain of market access under WTO negotiations may be eroded as a result of non-tariff measures. The present paper explores the opportunities of trade liberalisation and challenges put forward by the SPS and TBT agreements with special reference to India's fisheries exports. The impact of compliance with food safety measures are influenced by many factors such as compliance costs and change in consumer preferences associated with improved product information and quality. Partial equilibrium analysis has been used to assess the welfare effect of food safety standards in few countries. Econometric approaches have also been used to estimate the effect of standards on trade flows. In this paper we present an empirical analysis to evaluate the implications of compliance with food safety measures for the fisheries sector in India with the following objectives: (1) to estimate the cost of compliance of food safety measures and its implications on the competitiveness of fisheries sector, (2) to estimate demand and supply elasticity of fish and fishery products and (3) the likely impact of food safety regulations on the fisheries sector under 'small-country' assumption.
... Although several studies have analysed food consumption patterns in developing countries using either single equation models or demand systems such as the linear expenditure system and linear approximate almost ideal demand system (e.g. Abdulai et al., 1999), there is an increasing evidence that the Working-Leser form underlying these specifications does not provide an accurate picture of individual behaviour (Blundell et al., 1993; Hausman et al., 1995; Abdulai, 2002). ...
Undernutrition and malnutrition are still problems of unacceptable proportions in many developing countries. However, the debate on the roles of income and other socio-economic variables such as women's education and household size on food and nutrient demand continues. This study examines the demand for food and nutrients amongst households in Tanzania, using recent survey data. A quadratic almost ideal demand system (QUAIDS) is employed to estimate price and expenditure elasticities, as well as the impact of socio-economic variables on food demand patterns. A moment-based instrumental variable approach is then used to analyse the determinants of nutrient demand. The results show that income and other socio-economic variables exert significant effects on the demand for food and nutrients. The estimated expenditure elasticities for the nutrients range from 0.307 for iron to 1.26 for Vitamin B12. The elasticities are higher for those micronutrients that are consumed through animal products and lower for those micronutrients that are mainly obtained through staple foods. These results reflect the higher expenditure elasticities for meat, fish, eggs, milk, and milk products, as well as fruits and vegetables, relative to cereals and pulses, reinforcing the assertion that the demand for Vitamins A and B12, as well as calcium and zinc will increase with rising income.
... However, Banks et al. (1997) argued that there is increasing evidence that the Working-Leser Engel curve specification does not provide an accurate picture of individual behaviour. A series of empirical studies indicate that further terms in income are required for some expenditure share equations (Atkinson et al. 1990; Bierens and Pott-Buter 1987; Blundell et al. 1993; Hausman et al. 1995; Hardle and Jerison 1988; Hildenbrand 1994; Lewbel 1991). In their paper, Banks et al. (1997) derived a new class of demand systems, called the Quadratic Almost Ideal Demand System (QUAIDS) that have the quadratic term in the expenditure share model which preserves the flexibility of the empirical Engel curve findings while permitting consistency with utility theory. ...
The objective of this paper is to provide a more current and better understanding of expenditure patterns of the variety of consumption products and services for various groups of Malaysian society. The analysis focuses on differences in consumption across age groups, and identifies factors that affect the level of total expenditure as well as expenditure on specific consumption commodities. Estimates for income elasticities are computed to identify expenditure items as either luxuries or necessities. Differences with regard to an item being considered a necessity or a luxury are observed between urbanites and non urbanites, males and females, and married and non married individuals.
... However, Banks et al. (1997) argued that there is increasing evidence that the Working-Leser Engel curve specification does not provide an accurate picture of individual behaviour. A series of empirical studies indicate that further terms in income are required for some expenditure share equations (Atkinson et al. 1990; Bierens and Pott-Buter 1987; Blundell et al. 1993; Hausman et al. 1995; Hardle and Jerison 1988; Hildenbrand 1994; Lewbel 1991). In their paper, Banks et al. (1997) derived a new class of demand systems, called the Quadratic Almost Ideal Demand System (QUAIDS) that have the quadratic term in the expenditure share model which preserves the flexibility of the empirical Engel curve findings while permitting consistency with utility theory. ...
The objective of this paper is to provide a more current and better understanding
of expenditure patterns of the variety of consumption products and services for various
groups of Malaysian society. The analysis focuses on differences in consumption across
age groups, and identifies factors that affect the level of total expenditure as well as
expenditure on specific consumption commodities. Estimates for income elasticities are
computed to identify expenditure items as either luxuries or necessities. Differences with
regard to an item being considered a necessity or a luxury are observed between urbanites
and non urbanites, males and females, and married and non married individuals
This article examines the incidence and distributional effects of value added taxes (VAT). We exploit a sharp change in the VAT policy on food in Norway. Our findings suggest that taxes levied on food are completely shifted to consumer prices, while there is little spill‐over effects to most other goods. To understand the distributional effects of the reform, we use expenditure data and estimate the compensating variation of the tax induces price changes. We find that lowering the VAT on food attenuates inequality in consumer welfare, in part because households adjust their spending patterns in response to the price change.
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In recent discussions on local sustainable development, notions like “local for local” and “home bias” have often played a role. The purpose of this paper is to investigate whether preferences for specific place-based attributes might constrain or support tourism participation and tourism destination choice of distinct socioeconomic groups of visitors. To test this proposition, a large data set from the Italian Households Budget Survey for the period 1997–2007 has been used and, by means of the double-hurdle model, tourism participation and expenditure are modeled over the life-cycle of tourists. These data are next merged with location-specific attributes including natural amenities and infrastructural and regional-economic context variables. Our results show that location-specific or place-based characteristics affect intra- and interregional tourism differently, as well as destination choices. Regional differences between residents in two different macroareas in Italy (North and Center-South) are investigated. Location-specific characteristics may be either push or constraint factors for tourism participation. For families living in the North, participation in the tourism market is supported by the tourist characteristics of their home region. For families living in the central and southern regions however, economic conditions of the area where they reside appear to be more significant.
RESUMEN El presente artículo analiza los efectos de los cambios en los precios de los alimen-tos en la pobreza alimentaria en México. Las principales aportaciones del estudio son la estimación por primera vez para el caso mexicano de la elasticidad precio de la demanda para los 22 productos incluidos en la canasta alimentaria para el periodo 1992-2010, y la identificación de las diferencias en elasticidades entre la po-blación pobre y no pobre usando el método quadratic almost ideal demand system (QUAIDS) de Banks, Blundell y Lewbel (1997). El análisis incluye la construcción de una serie de pobreza alimentaria para 1950-2010, la descomposición de los cambios en la pobreza que identifica la importancia del efecto del incremento en los precios, el análisis de las variaciones en la estructura de consumo de los hogares en pobreza alimentaria. De nuestros resultados se infiere propuestas concretas para amortiguar el efecto de aumentos en los precios sobre el consumo de los hogares, así como op-ciones para motivar la producción de bienes alimentarios críticos para los pobres. ABSTRACT This study analyzes the effect of increments in the price of basic food basket over poverty in Mexico. Our main contribution is the estimation, for the first time, of price elasticity for the 22 goods included in the food poverty line, for the period
This paper presents a formal model in which differential satiation dynamics of various consumer needs explain (not only describe) the shapes of Engel curves. In the model, individuals allocate their income to various consumption categories proportional to corresponding need deprivation states, a decision making process called matching. The model allows explaining some empirical regularities that other models have difficulties accounting for. It can, for example, reconstruct that income elasticities for food tend to decrease with rising income, and that goods that are luxuries at relatively low income levels can become necessities at higher income levels. Moreover, the paper compares the Engel curves obtained from the matching model with Engel curves obtained from a utility maximization model. While both types of Engel curves are relatively similar at high income levels, at lower income levels matching and maximization lead to very different allocations of income. The paper shows that a given amount of income redistribution leads to less additional welfare when individuals follow matching behavior than when they maximize their utility. Accordingly, to obtain a given amount of additional welfare more income redistribution is needed than a policy maker who (mistakenly) assumes that individuals rationally maximize their utility predicts.
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