Analysis of Food Consumption Patterns in China: Nonparametric and Parametric Approaches

Abstract

This study analyzes consumption patterns of seven major categories of food for Chinese urban households using both nonparametric and parametric approaches. Nonparametric analysis was conducted to ensure that the data were consistent with the underlying theory. For the parametric part, a flexible demand system that nests the “Almost Ideal Demand System” (AIDS) and the Translog demand system proposed by Lewbel (1989) was estimated, and the expenditure and price elasticities for several food categories were analyzed. Chinese provincial data from the Income and Expenditure Survey of Chinese Urban Households showed that Chinese consumers' consumption behavior is consistent with the microeconomic utility maximization assumptions. The parametric analysis shows that in China from 1985 to 1990, meats, fruits, and eggs had very high expenditure elasticities. Grains were a necessity for low-income provinces but were an inferior good for high-income provinces. The results are useful in understanding and predicting food consumption patterns in China and have implications for economic policy decision making.