Vol - 19, Issue - 04
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Journal of the Austrian Society of Agricultural Economics (JASAE)
Journal ID : JASAE-06-04-2023-237
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Title : EFFECT OF DEMOGRAPHIC FACTORS ON THE U.S. HOUSEHOLD CONSUMPTION OF SOME SELECTED FOODS USING QUADRATIC ALMOST IDEAL DEMAND SYSTEM (QUAIDS)
by Babatunde Stephen Ojetunde, Babatunde Stephen Ojetunde, Babatunde Stephen Ojetunde,
Abstract : This study estimated the effect of demographic factors on the US household consumption of some selected food using the Quadratic Almost Ideal Demand System (QUAIDDS). Quarterly Food-at-Home Price Database from 2004-2010 from the USDA site was used, containing information on prices, total expenditure, household size, divisions, and regions, respectively. Average household size was used because the data have different numbers of households across all divisions and regions. Demand for the selected food groups was estimated using Quadratic Almost Ideal Demand System (QUAIDS). The result of the QUAIDS model showed that all the expenditure elasticities were positive and statistically significant at the percent level, which implies that food items are normal goods. Furthermore, it was revealed that raw sugar (.96725022), ice cream/frozen desserts (.95327974), baked good mixes (.97466743), and bakery items ready to eat (.99237186) are necessities since their coefficients were less than one. Additionally, all own-price elasticities were negative, as expected in both compensated and uncompensated price elasticities estimated for food items. The result also revealed that baked good mixes were a substitute for raw sugar, bakery items ready to eat were substituted goods for non-carbonated calorie beverages, raw sugar and packaged sweets/baked goods was a substitute for good mixes, and non-carbonated calorie beverages was substitute for bakery items ready to eat which is an indication that foods were substitutes. In addition, Marshallian cross elasticities show that both baked goods mixes and packaged sweets/baked goods were substituted goods for raw sugar, and ice cream/frozen desserts were substituted goods for non-carbonated calorie beverages. Packaged sweets/baked goods and bakery ready to eat were substituted goods for ice cream/frozen desserts, and raw sugar and packaged sweets/baked goods were substituted goods for baked goods mixes. Also, raw sugar, ice cream, and frozen desserts, baked goods mixes were substituted for packaged sweets/baked goods. In contrast, non-carbonated calorie beverages and ice cream/frozen desserts were substitutes for bakery items ready to eat. Therefore it is recommended that economic policies be made to prevent fluctuations in food prices in the US.

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