Estimates Of Income Elasticities Research Articles

Present Situation and Future Prospect of Chicken Meat Production and Consumption in Asia. A Study of Selected Nine Countries.

This paper reports the results of survey on chicken meat production and marketing in selected Asian countries representing developing (India, Bangladesh, Pakistan), rapid developing (Thailand, Philippine, Iran), and developed nations (Japan, Taiwan, Rep. of Korea) in the region. This survey was done during 1994-1995, coordinated with Asian Productivity Organization (APO). Subsequently the meat production and marketing symposium was held in Tokyo which was attended by those foreign experts participated during the survey. The survey covered all the aspects of poultry industry which included chicken, ducks, geese and quails. The survey data obtained from 1970 to 1993 concerning poultry industry was used. The primary objective is to describe poultry consumption and production patterns. The outlook for the poultry industry is promising. In the past 20 years consumption of chicken meat has increased dramatically in these nations. Consumption of chicken meat will continue to increase as estimated income elasticities for chicken meat indicate a latent demand for this meat comparative to other types of meats. In the coming years this increase will continue, although at a slower pace. In the less developed countries in the region, consumption and production will increase quicker than developed countries.However, our previous study on meat consumption patterns indicated that the consumption of meat is influenced by taste and preference as well as the level of income. With the increase in household income level, income elasticities of demand for chicken meat has increased and it is highest in Pakistan (1.639) followed by India (0.881) and Taiwan (0.4780). Chicken are native to the monsoonal rice growing areas of Asia and so they have become a suitable alternative to fish which has been their main traditional source of protein. However, the preference of animal protein has been shifting from fish to chicken meat. Chicken is very efficient and economically the best as far as the feed conversion ratio is concerned. Another factor which affects meat consumption is the cultural and religious factor. Certain religions has restriction on consumption of certain meat types but none for chicken meat. Therefore, chicken meat can be called as Universal Meat.

The demand for alcohol in the United Kingdom

Using the AIDS model, we show that there exists for the UK a stable long-run relationship between expenditure shares on beer, cider, spirits and wine, alcohol prices, total alcohol expenditure and a range of non-economic variables relating to advertising, licensing, the employment, social class and demographic characteristics of consumers, and climate. Our estimates of key price and income elasticities generally lie between those found from other time-series studies (which exclude most of these non-economic variables) and those found from cross-section studies (which generally include them). However, the restrictions required for separability, homegeneity and symmetry (although not those for perfect price aggregation) are decisively rejected.

The demand for calories in developing countries

Empirical analyses of calorie intake response to income have produced strong disagreement with some showing a low and statistically insignificant effect. Using cross‐sectional data for 41 developing countries in 1992, calorie intake is significantly determined by per capita income, income distribution, income growth, urbanization, food aid and socio‐cultural factors. The estimated income elasticity is significant, around 0.07, while that with respect to urbanization is about 0.17. Inadequate calorie intake is caused by low levels of economic development in general, rather than by low income in particular. Policies aimed at alleviating inadequate calorie intake should not focus on income alone.

Incorporating Demographic Variables in Brand Choice Models: An Indivisible Alternatives Framework

Incorporating demographic variables in brand choice models is conceptually appealing and has numerous managerial benefits. Retailers and brand managers can assess geodemographic variations in demand and marketing mix response in order to implement micromarketing strategies. For example, a retailer planning to locate a new outlet can get some sense of the differences in demand patterns and price and promotion sensitivities in the new trading area in order to make initial stocking, inventory, pricing, and promotion decisions. For existing outlets, retailers can fine tune the assortment and merchandising activities in a category to match local market conditions. Similarly, a packaged goods manufacturers would benefit from getting a sense of whether they should stress promotional activity for one part of a brand's product line in some retail trading areas, and other parts of the brand's line in other retail trading areas. Unfortunately, a general finding across existing studies is that the impact of demographic variables on brand choice is neither strong nor consistent. These findings are puzzling given that one would expect certain demographic variables, such as income, to have some influence on brand choice behavior. Moreover, Hoch et al. (Hoch, S. J., B. D. Kim, A. J. Montgomery, P. E. Rossi. 1995. Determinants of store-level price elasticity. J. Marketing Res. 32(February) 17–29.), using store level data, find that a relatively small set of demographic variables is much more influential than competitive variables in explaining differences in price sensitivity across retail trading areas. In light of such contradictory findings, there is a need for a better conceptualization of the role of income and other demographic variables in household purchasing, and this is the primary objective of this study. This paper presents a microeconomic-based framework called the “indivisible alternatives” (IDA) framework to model household brand choice. A key aspect of the IDA framework is that it explicitly models alternatives in the market as being indivisible, while past work has either explicitly or implicitly assumed perfect divisibility. Indivisibilities force a household's selection of a brand size and its level of category expenditure into a single joint decision. Hence, demographic variables that influence category expenditure (e.g., income) also influence the choice of a brand size. In addition, since alternatives in the category come in several discrete sizes, indivisibilities introduce differences in holding costs in the choice of a brand-size combination. Consequently, demographic factors that influence holding costs through consumption rate differences (e.g., household size) impact the choice of a brand size in a product category. In this manner, indivisibilities in market offerings naturally lead to differences in choice behavior across households that can be linked to demographic factors in a logical fashion. In empirical applications to two different scanner panel data sets (ketchup and ground coffee), the proposed framework compares favorably with two benchmark specifications in terms of both goodness of fit and predictive validity. The results from these product categories indicate that a household's price sensitivity is inversely related to its income level, and that factors such as household size and seasonality, which are likely to influence consumption rates, make households more or less willing to buy larger package sizes. Income elasticity estimates from the model confirm that, ceteris paribus, households with lower incomes will have a higher propensity to purchase private labels and generic brands, and a lower propensity to purchase national brands, compared with households with higher incomes. The micromarketing potential of the IDA framework is explored in market simulations conducted for two different zip codes within a metropolitan area that vary with respect to income levels and other demographic factors. The results indicate that for the product categories studied, there are substantial differences across market areas in their response to the retail promotion of very large and very small package sizes within the same brand's product line. The differences in response suggest that it may be beneficial to customize promotional programs to market areas based on their underlying demographic composition. Finally, our findings suggest a link between household income and deal proneness that is conditional on other demographic variables and the expenditure required for the brand size in question. Specifically, we find that smaller households with lower income levels are more likely to respond to promotions for smaller, less expensive items within a category, while larger households with higher incomes are more likely to respond to promotions for larger, more expensive items within a category.

Income and price elasticities of demand for alcoholic drinks

This paper provides estimates of income and price elasticities of demand for beer, wine and spirits in the UK and utilizes these elasticities to estimate the impact of the increase in tax rates, announced by the Chancellor in his revised November 1994 budget, on total tax revenues. The estimates of additional tax revenues based on our model are lower than those expected by the Chancellor. The results reported in this paper suggest that if the Chancellor were to realize the revenues he expects from taxation of alcoholic drinks he would have to increase the tax rates on wine and lower those on beer and spirits.

On nonparametric demand analysis

Building on the work of Afriat and Varian, a nonparametric analysis of consumption behavior is presented. Inner-bound and outer-bound representations of preferences are obtained that are consistent with both the data and consumer theory. It is shown how a priori information on demand response can be incorporated in the analysis. The approach generates estimates of price and income elasticities of demand. An application to U.S. consumption data illustrates the usefulness of the method for predicting demand behavior as well as for welfare analysis.

ARE SERVICES INCOME‐ELASTIC? SOME NEW EVIDENCE

The hypothesis that the demand for services is income‐elastic tended to find support in early empirical work. Recent studies however, adopting improved methodologies and better international data (based on PPP exchange rates), have challenged this conventional wisdom. Using an updated, disaggregated dataset covering 60 countries in 1980 this paper re‐estimates income and price elasticities of demand for services. It rejects the income‐elastic argument overall but confirms a wide range of income elasticity estimates (above and below unity) across different types of services. Estimates are also shown to be sensitive to the a priori model of service demand.

Explaining the Variation in Elasticity Estimates of Gasoline Demand in the United States: A Meta-Analysis

Meta-analysis is used to determine if there are factors that systematically affect price and income elasticity estimates in studies of gasoline demand in the United States. Elasticity estimates from previous studies are used as the dependent variable with data characteristics, model structure, and estimation technique as the independent variables. Included among the explanatory variables a rejunctional form, lag structure, time span, and national setting (U.S. versus the U.S. pooled with other countries). Inclusion of vehicle ownership in gasoline demand studies is found to result in lower estimates of income elasticity, data sets which pool U.S. and foreign data result in larger (absolute) estimates of both price and income elasticity, and the small difference between static and dynamic models suggests that lagged responses to price or income changes are relatively short. This study also found that elasticity estimates appear relatively robust across estimation techniques.

Demand elasticities in international marketing: A meta-analytical application to tourism

Understanding buyer behavior and demand for international travel and tourism presents an interesting problem in marketing. Its principal characteristics are that it involves complex buying behavior, the tourism product is an amalgam of a wide diversity of services and goods, tourism exports require the transportation of the consumer, and purchases involve foreign currency transactions. The author discusses the buyer-behavior implications of these characteristics and reports the results of a study that assesses demand elasticities. A literature review yielded 77 empirical studies of international tourism demand, which collectively reported 10,078 demand coefficients. The majority of the coefficients were in the form of demand elasticities, and estimates of income and price elasticities represented a substantial portion of the wide variety of demand determinants studied. The estimated elasticities were integrated across studies using meta-analysis to reveal underlying patterns, and therefore generalizations, in these findings.

A Demand Systems Analysis of Food Commodities by U.S. Households Segmented by Income

AbstractUsing the 1987–88 Nationwide Food Consumption Survey, twelve food commodity groups were analyzed according to household poverty status. Parameter estimates were used to obtain subsistence expenditures, own‐price elasticities, expenditure elasticities, and income elasticities. Own‐price elasticities were similar between the income groups for most commodities. However, income elasticities were consistently higher for the lower‐income group. The use of average estimates of price and income elasticities for the population as a whole for the projection of individual commodity demands is not likely to be successful if notable changes are evident in income distribution.

The Price Elasticity of Housing Demand in Britain: Issues of Sample Selection

This paper contains estimates of the price and income elasticities of housing demand for six British conurbations. Using 1988/1989 data from the Joseph Rowntree Foundation Housing Finance Survey, the estimates are derived from a hedonic house price equation. Consideration is given to the possibility of sample selection bias. The price elasticity estimates are found to be robust with respect to alternative specifications and corrections for sample selection bias. However, there is clear evidence of sample selection bias and the effect of this is most clearly seen in the estimates of income elasticity which increase when allowance for bias is made.

96/01343 An econometric study of the demand for gasoline in the Gulf Cooperation Council countries

Reliable and accurate estimation of price and income elasticities of demand for gasoline are important ingredients for long-run energy planning and policy formation. The purpose of this study is to develop and estimate a model for gasoline demand for Gulf Cooperation Council (GCC) countries (Bahrain, Kuwait, Oman, Oatar, Saufi Arabia, and the United Arab Emirates). The model is capable of producing short-run and long-run price and income elasticities. Since the first oil price hike in 1973, a great deal of attention has been directed toward the demand for gasoline, especially in the industrialized countries. Few studies have been directed toward the demand for gasoline in developing countries. In terms of primary energy consumption, the GCC`s energy needs are met by oil, natural gas, and electricity. Without any doubt, oil is the largest energy source consumed and gasoline is the most important oil product. However, very few studies have been directed toward analyzing GCC energy demand, and yet there has been not attempt to model and estimate GCC gasoline demand. This study attempts to address this gap.

The Income Elasticity of Demand for Housing: Evidence from Concentration Curves

This study applies techniques developed in the literature on income and consumption distribution to estimate income elasticities of housing demand. Although the approach cannot incorporate other determinants of demand, raising the possibility of bias, it possesses some attractive properties as well. The approach economizes on the amount of data required for estimation and allows the elasticity to vary nonmonotonically with income. If practitioners possess information on the direction of bias, results of the approach can then be used to bound the value of income elasticity.

The Impact of Dwelling Quality and Neighbourhood Quality on the Estimation of the Income Elasticity of Demand for Rental Housing in Jeddah, Saudi Arabia

This study provides new evidence on the estimation of the income elasticity of demand for rental housing based on individual interviews with 405 households. It looks specifically at the impact of both dwelling and neighbourhood quality aspects on the evaluation of this elasticity. The study finds that the income elasticity of demand for rental housing in Jeddah is 0.519. When the sample is restricted to include Saudi households only, the elasticity estimate is 0.465. These values are within the range of previous empirical estimates. The results also indicate that for a range of various quality measures, the income elasticity is estimated to be less than unity. But, our suggested quality aspects were found to exert sizeable differences on the magnitude of this elasticity for the full sample (from 0.351 to 0.802) as well as for the Saudi sample (from 0.382 to 0.603). Stratified income elasticity estimates for Saudis were also found to be generally less than those for the whole sample.

Can a Public Health Care System Achieve Equity?

Equity in health care provision is an important policy goal in Norway. This article addresses equality in the services provided by primary care physicians. These services are the responsibility of local government financed mainly through public funding. Patient fees are low. The local government system results in geographical variation in the number of physicians relative to local health demands. The authors present the hypothesis that this generates inequalities in health care utilization. The system of government finance is based on the assumption that utilization of health services is independent of patient income. Therefore, variation in income is expected to have only a small impact on utilization. The authors estimate a demand model by combining extensive micro data with aggregate data on municipal supply. There is very little relationship between indicators of access and health care utilization. The estimated income elasticities approximate zero, supporting the argument that equality in utilization has been achieved. However, the authors results also raise the question of whether equality has been achieved at the cost of limiting supply of services for people who could afford to consume more, or to pay for services of higher quality.

The demand for local government goods

Abstract. This paper analyses the spending preferences of local government elected politicians. It is argued that the median voter model is inappropriate in multi‐party systems that provide multiple government services, and that the preferences of the representatives are consequential to local resource allocation. We develop a micromodel in which service demand is conditioned by exogenous public revenue, prices, and demographic factors. We hypothesise that politicians demands are affected by party affiliation, public sector occupation and committee assignment. The estimates of the micro demand functions are based on data pertaining to Norwegian local governments. It is found that the estimated income elasticities correspond approximately with elasticities of output studies. Party affiliation has an impact on demand patterns, while government occupation and committee appointment are major determinants of politicians desired allocation of public services. Further analyses reveal that the numerical strength of parties impacts weakly on the actual service allocation, whereas the representation of government employees has occasional effect. The budgetary allocations are imperfect expressions of the elected council's underlying preferences.

An Almost Ideal Demand System Analysis of Fresh Fish in Semarang, Indonesia

This paper presents results from estimating an Almost Ideal Demand System (AIDS) for meat and fresh fish in Semarang, Indonesia. The results provide the first empirical estimates of income (i.e., expenditure), own and cross-price elasticities of demand of important food items by households. Fish was found to be a necessity item while beef and chicken are luxury goods. Also, it was found that fish and chicken as well as beef and chicken are complementary goods but fish and beef tend to be substitutes.

Demand for food in Myanmar (Burma)

AbstractAggregate quarterly time series data from 1975 to 1987 on government procurement prices and open (black) market prices were used in estimating an almost ideal demand system (AIDS) and double‐log models for consumption of foodstuffs in Myanmar. The results from the AIDS model were superior to those from the double‐log models.The estimated income elasticity of demand for non‐meat foodstuffs was high, even for low‐quality rice, which has been shown to be an inferior good in other Asian countries. The income elasticities for the non‐cereals (groundnut oil, sesame oil, pulses, potato and onion) are positive and less than one. Contrary to expectation, the income elasticities for all meat items are low. Own‐price elasticities for most foodstuffs were less than one. The estimated cross‐price elasticities indicate the complementary nature of the basic food items to rice.A brief analysis of the effects of taxing Myanmarese rice exports and subsidising consumers indicated that there are net costs to government, unevenly distributed welfare gains to consumers and welfare losses to farmers.

A Joint Model of Tenure Choice and Demand for Housing in the City of Karachi

The paper estimates a joint model of tenure choice and demand for housing for the city of Karachi, Pakistan, using a two-stage estimation procedure. Permanent income and demographic variables are included in the analysis. The study uses data collected at the household level in the city in 1987/88. Results show that ownership rates are high in Karachi. Ownership is more likely with increases in permanent income, age, household size and residence in the Unauthorised Areas. Permanent income, transitory income, age and education of the head significantly affect the consumption of housing both for renter and owner households. Results of the analysis and the estimated income elasticities of demand are comparable and consistent with those reported for other developing countries.

Demand for food in Myanmar (Burma)

Abstract Aggregate quarterly time series data from 1975 to 1987 on government procurement prices and open (black) market prices were used in estimating an almost ideal demand system (AIDS) and double-log models for consumption of foodstuffs in Myanmar. The results from the AIDS model were superior to those from the double-log models. The estimated income elasticity of demand for non-meat foodstuffs was high, even for low-quality rice, which has been shown to be an inferior good in other Asian countries. The income elasticities for the non-cereals (groundnut oil, sesame oil, pulses, potato and onion) are positive and less than one. Contrary to expectation, the income elasticities for all meat items are low. Own-price elasticities for most foodstuffs were less than one. The estimated cross-price elasticities indicate the complementary nature of the basic food items to rice. A brief analysis of the effects of taxing Myanmarese rice exports and subsidising consumers indicated that there are net costs to government, unevenly distributed welfare gains to consumers and welfare losses to farmers.