Ideal Demand System Research Articles

The Welfare Effects of Carbon Tax on Chinese Households: A Study Based on the 2013 Chip Survey Data

Based on the micro-data from the 2013 Chinese Household Income Project (CHIP) Survey, the authors use a Quadratic Almost Ideal Demand System (QUAIDS) model to simulate and measure the impacts on the welfare of urban and rural households with different incomes after a carbon tax at 50[Formula: see text]RMB/ton was levied in China. The results show that the collection of carbon tax will increase households’ consumer spending to varying degrees. In urban areas, the carbon tax exerts the greatest impact on low-income households, followed by high-income households; while in rural areas, it has the most significant effects on high-income households and the least on low-income households. On the whole, carbon tax’s impact on urban households is greater than that on rural households. To a certain extent, it can help the household income inequality change for the better and narrow the urban–rural income gap. Since the carbon tax does not act on the distribution of Chinese household income in a simply regressive or progressive way, the authors believe that China should implement supporting policies such as tax subsidies or tax refund as supplements to carbon taxation in an effort to establish a mechanism for cyclic utilization of carbon tax revenue.

Estimation the Almost Ideal Demand System for Egyptian Onion Exports in the Most Important Foreign Markets

Estimation the Almost Ideal Demand System for Egyptian Onion Exports in the Most Important Foreign Markets

Impact of Tobacco Expenditure on Household Spending Patterns in Kenya

Despite measures to control tobacco use in Kenya, there is still an increasing importance in the use of tobacco. This is seen by the growth in per capita consumption over time. Tobacco, being an addictive product, creates a situation where consumers allocate part of their resources towards its consumption and therefore positions the use of tobacco as an important expenditure decision in households in Kenya. Due to budget constraints faced by households in Kenya, tobacco consumption may crowd out consumption of essential goods and services. This paper therefore focuses on the impact of tobacco expenditure on household spending patterns in Kenya. Using the 2005/2006 Kenya Integrated Household and Budget survey, a Quadratic Almost Ideal Demand System was used to estimate a system of Engel curves to check whether the differences in expenditure between the two types of households is as a result of tobacco use or not. Results suggest that tobacco crowds out the consumption of food, health care, schooling, clothing, entertainment, house care, and personal care. Geographical location and socio-economic standing of households have a significant influence on the magnitude and pattern of crowding out. The policy implication of this finding is that tobacco control should be an integral part of governments’ poverty alleviation strategy.

Rural Sudanese household food consumption patterns

The paper aims to estimate Sudanese household food demand by focusing on six aggregated food items. The items are cereals (sorghum, millet, wheat), meat and chicken, milk and eggs, vegetables (okra, onion, tomato), staples (sugar, salt, oil), and caffeine intake (tea and coffee). The paper used the Quadratic Almost Ideal Demand System (QUAIDS) model to estimate Sudanese household food demand. The results showed that demographical variables have an impact on households’ expenditure shares. For example, the results revealed that married respondents spend less from their income on cereals and staples compared to unmarried respondents. Also, men spend more from their income on caffeine compared to women. The results of the Marshallian own-price elasticities showed that all food items in Sudan are price inelastic indicating that price changes have a small impact on quantity demanded. Also, expenditure elasticities show that all food items in Sudan classified as necessities, except for meat and chicken.

Municipalities\u2019 Decision to Care: At Home or in a Nursing Home

An almost ideal demand system for long-term care is estimated using data from Norway, where the split of long-term care between home care and care in nursing homes is determined by municipalities. Previous literature has barely addressed what determines municipalities’ or other organizations’ allocations of resources to the sub-sectors of long-term care. The results show that home care is a luxury, while nursing home care is a necessity with respect to total expenditures on long-term care. Municipalities respond to high unit costs for home care by reducing that type of care. Municipalities are highly responsive to variations in the need for the two types of care and seem to provide a well-functioning insurance mechanism for long-term care. In the previous empirical literature, municipalities’ role as providers of insurance against the consequences of disabilities and frailty has received scant attention.

Estimating the Demand Elasticity of Rice in Bangladesh: An Application of the AIDS Model

This study determines the causes of consumption, compensated, and uncompensated demand for rice using the Linear Approximate Almost Ideal Demand System (LA-AIDS) model in Bangladesh. The model was used along with the corrected Stone Price Index. The study’s findings showed that the income elasticity of demand for rice was only 0.76, indicating that rice is a normal and necessary food item. The own-price elasticity (compensated and uncompensated) showed that all food items were price inelastic. The rice’s own-price elasticity demonstrated that if the price falls by 10%, rice demand will rise by 8.21%. This cross-price elasticity showed the weak substitution effects of a price change. Therefore, price interference may not lead to a substantial effect on food demand.

Climate change and household welfare in sub-Saharan Africa: empirical evidence from Swaziland

The fifth assessment report of the Intergovernmental Panel on Climate Change and several studies suggest that climate change is expected to increase food insecurity and poverty in many parts of the world. In this paper, we adopt a microeconometric approach to empirically estimate the impact of climate change-induced hikes in cereal prices on household welfare in Swaziland (also Kingdom of Eswatini). We do so first by econometrically estimating expenditure and price elasticities of five food groups consumed by households in Swaziland using the Almost Ideal Demand System (AIDS), based on data from the 2009/2010 Swaziland Household Income and Expenditure Survey. Second, we use the estimated expenditure and compensated elasticities from the AIDS model, food shares from the household survey, and food price projections developed by the International Food Policy Research Institute (IFPRI) to estimate the proportionate increase in income required to maintain the level of household utility that would have prevailed absent an increase in food prices. Our results show increases in cereal prices due to climate change are expected to double extreme poverty in urban areas and increase poverty in rural areas of the country to staggering levels - between 71 and 75%, compared to 63% before the price changes. Income transfers of between 17.5 and 25.4% of pre-change expenditures are needed to avoid the welfare losses.

The effects of taxing sugar-sweetened beverages in Ecuador: An analysis across different income and consumption groups.

To analyze the effects of taxing sugar-sweetened beverages (SSBs) in Ecuador, this study estimates a Quadratic Almost Ideal Demand System model using data from the 2011–2012 National Survey of Income and Expenditure for Urban and Rural Households. We derive own- and cross-price elasticities by income quintiles and consumption deciles for five beverages, including two types of sugary drink: (i) milk, (ii) soft drinks, (iii) water, (iv) other sugary drinks, and (v) coffee and tea. Overall, results show that a 20% increase in the price of SSBs will decrease the consumption of soft drinks and other sugary drinks by 27% and 22%, respectively. Heterogeneous consumer behavior is revealed across income and consumption groups, as well as policy-relevant complementarity and substitution patterns. Policy impacts are simulated by considering an 18 cents per liter tax, implemented in Ecuador, and an ad-valorem 20% tax on the price. Estimated tax revenues and weight loss are larger for the latter. From a health perspective, high-income and heavy consumer households would benefit the most from this policy. Our study supports an evidence-based debate on how to correctly design and monitor food policy.

An Analysis of Household Foods Demand in Rural Burundi

This study was aimed to investigate the roles of income and other socioeconomic variables such as household size, land size, head of household education level, raising the animals, source of income on food demand in rural Burundi. The demands for food and nutrients among the households in rural Burundi were examined using a recent survey done by the authors. An almost ideal demand system (AIDS) was employed to estimate the price and expenditure elasticities and the impact of socioeconomic variables on food demand patterns. An econometric model was then used to analyze the determinants of food demand. The estimated expenditure elasticities for the food groups range from 0.64 for oils to 1.36 for meats. These outcomes showed that there is a higher expenditure elasticities for meats, fish, and animal products, as well as cereals and grains. The results showed that the income and other socioeconomic variables exerted significant effects on food demand. The income and other socioeconomic variables exerted a significant impact on the food demand, and higher expenditure elasticity for food group items will increase remarkably with rising income.

Food Security Assessment in Azad Jammu and Kashmir: Empirical Analysis of Dietary Diversity, Current and Project Food Demand and Supply-Demand Gap

This study attempts to determine the dietary diversity score for different food groups and estimates the current demand for different food groups in AJK. Data for this study was collected from 1250 households covering all 10 administrative districts of AJK by following multi-stage sampling techniques through a comprehensive interview schedule. Ten commodity groups (Wheat, Rice, Milk, Meat, Vegetables, Fruits, Pulses, Oil/Ghee, Tea and Other food were developed for analysis. Linear Approximate-Almost Ideal Demand System (LA-AIDS) model was used for estimating food demand elasticities through Zellner’s Seemingly Unrelated Regression by using STATA software. All the 10 food groups were found normal goods, except milk and fruits (income elasticity higher than unity). This implies that in future demand for milk and fruits would increase more proportionately as income would increase. The own price elasticities of all 10-food groups were also found congruent to economic theory (Wheat-0.28, Rice-0.65, Milk-0.92, Meat-0.34, Fruits-0.61, Vegetables-0.21, Pulses-0.29, Oil and ghee-0.04, Tea-0.35 and Other food-0.32). The income and own price elasticities depicted that wheat, vegetables, pulses and oil and ghee are necessities as compared to other food groups. The cross-price elasticity illustrated that rice could be a substitute for wheat and wheat for rice in the State of AJK. The Berry’s Index (82.43) depicted that food was diverse on average with a minimum Index value of 61.31. The study of different factors in relation to Berry’s Index depicted that education and income significantly and positively affect Berry’s Index while location of household in urban or rural area do not affect diversification of food. Inclusion of all necessities in Food Stamp program and Ramadan package and efforts by agriculture and livestock department regarding improved production of food commodities are recommended.

Household Demand for Fruits and Vegetables in Rural and Urban South-Western Nigeria

In spite of the enormous benefits of fruits and vegetables, studies have shown that their consumption in Nigeria is far below the recommended daily intake therefore, this study investigated the factors influencing the demand for fruits and vegetables among households in rural and urban South-western Nigeria. Data were sourced from 152 rural and 259 urban households, respectively with the aid of a semi-structured questionnaire and were analysed using descriptive statistics and the quadratic almost ideal demand system model. Household size and location, sex and years of education of household heads influenced the demand for fruits and vegetables. Both rural and urban households considered the demand for fruits and vegetables to be luxury goods. Rural households were more responsive to changes in own-prices of fruits and vegetables than their urban counterpart. Fruits and vegetables were “net substitutes” in the rural and “complements” in the urban.

Examining behavioral patterns in household fuel consumption using two-stage-budgeting framework for energy and environmental policies: Evidence based on micro data from Pakistan

Prime objective of this study is to analyze fuel consumption patterns at national as well as at provincial level for Pakistan. Dynamic patterns in household fuel choices have been examined under Two-Stage Budgeting Framework through Quadratic Approximation of Almost Ideal Demand System (QUAIDS) using HIES data for year 2015–16 to obtain reliable estimates of Price and Budget Elasticities. Quadratic Engel estimates reflect households’ energy expenditures allocation decisions while the Probit estimates explore how alternate fuels are chosen by households for consumption? The Engel estimates highlight that the share of fuel expenditures in total household expenditures is higher in rural areas than in urban areas. The computed compensated price elasticities suggest that Firewood and Kerosene are relatively more price inelastic in rural areas as compared to the urban areas. Furthermore, our estimates also indicate that cleaner fuels are more price inelastic in urban areas than in rural areas with inter-provincial variations in computed elasticities. These estimates can be used as an effective policy making tool for transition towards cleaner fuels, energy policy simulations, to evaluate taxation and subsidy frameworks and energy system forecasting to prevent environmental degradation.

The Global Demand for Alcoholic Beverages, 2010–2015: Price and Expenditure Elasticities

This paper analyses the demand for the alcoholic beverages. Taking a worldwide sample of forty-four countries and data from 2010 to 2015, own-price, cross-price, income, and expenditure elasticities are computed from the estimation of a single equation and the almost ideal demand system (AIDS), using the seemingly unrelated regression estimation (SURE) approach. Based on the elasticities’ estimations, the findings show that for wine, beer, and spirits consumption increases proportionally with total expenditure on alcoholic beverages (and income). Regarding their own price, the demand for the three beverages present a negative and inelastic behavior. Moreover, beer and spirits are imperfect substitutes of wine and vice-versa, while beer and spirits are complements.

Direct and Indirect Energy Rebound Effects in German Households: A Linearized Almost Ideal Demand System Approach

We estimate direct and indirect energy rebound effects for a wide variety of goods and services in Germany. To this end, we employ a linearized approximation of the popular Almost Ideal Demand System (AIDS) approach suggested by Deaton and Muellbauer (1980). Excluding measures of energy efficiency when estimating rebound can lead to biased results. We compensate for this shortcoming of previous research by explicitly accounting for energy efficiency in our estimations. Using data for Germany from 1970 to 2017, we find moderate direct and significant indirect rebound effects for different energy carriers across four model specifications. The size of the rebound effect proves to be sensitive to the expenditure shares used for the calculations, which in some cases leads to negative overall rebound estimates.

An assessment of household food consumption patterns in Thailand

This study examines household food consumption patterns in Thailand using the 2015 Socioeconomic Survey. A demand system consisting of six main food groups is estimated applying the Quadratic Almost Ideal Demand System model. The results indicate that the expenditure elasticity for rice and other grains is the lowest among all food groups. Meat and fishes, eggs and dairy products, and food-away-from-home (FAFH) appear to be luxuries. FAFH consumption is highly associated with household income and level of urbanization. All food groups are price-inelastic demand with supportive evidence of food purchase substitution. The responsiveness of food demand with respect to price and income show remarkable differences across socioeconomic status and geographic locations. Specifically, low-income and elderly-headed households tend to be more responsive to food price and income changes. This suggests that they are likely afflicted with inadequate food intake caused by soaring food prices or economic downturn.

Welfare effects of carbon taxation on South African households

This paper evaluates the welfare impacts of carbon taxation on South African households. Using household survey data for the period 2009–2015, I estimate the Quadratic Almost Ideal Demand System (QUAIDS) model to obtain elasticities and use them to simulate consumer responses to price changes resulting from carbon taxation. Results show that an increase in electricity and public transport prices following a carbon tax policy is regressive while a price increase in motor fuel is progressive. In addition, when there is a simultaneous increase in the prices of energy goods, the poorest and middle income households disproportionately suffer a higher welfare loss compared to the richest households. I also show that income is important in determining whether rural households experience a higher or lower welfare loss than urban households. Furthermore, revenue recycling in terms of lump-sum transfers of the tax revenue to households below the national poverty lines and the bottom 40% would offset the welfare loss from a carbon tax policy in South Africa.

Do some travel purposes lead to more tourist expenditure patterns than others? Evidence from an almost ideal demand system (AIDS) analysis

ABSTRACT Tourists have different travel purposes and show different patterns of resource consumption at travel destinations. The present study examines travel expenditure patterns among domestic travelers with different main travel purposes during the holidays by utilizing the almost ideal demand system approach. The study used data from 760 Korean respondents and determined that tourists pursuing different travel purposes exhibited significant differences in expenditure patterns. The travel expenditure allocation of different tourist types with varying travel purposes can provide important information that can contribute to the sustainable development of tourism destinations by tailoring travel activities and programs for targeted segments.

Food security in Kenya: Insights from a household food demand model

This paper evaluates the household food security situation in Kenya in terms of access to food. We apply a quadratic almost ideal demand system (QUAIDS) model to nationally representative household survey data from Kenya, and estimate and interpret price and expenditure elasticities as indicators of household sensitivity to market shocks. Our estimation results show positive expenditure elasticities, close to unity, while all compensated and uncompensated own-price elasticities are negative and smaller in magnitude. A complementary welfare analysis shows high compensated variations in the long run, ranging between 34% and 131% across food groups. This suggests that rising relative food costs have led to deterioration of the food security situation in Kenya, and the most severely affected households seem to be those that rely on informal markets and reside in rural areas. To improve food security, targeted income support could be a more effective policy than price support, given the much higher estimated expenditure elasticities.

DEMAND FOR FOOD COMMODITIES IN TULUNGAGUNG REGENCY

Food is a basic need that must be fulfilled by every citizen / community and is the right of every resident to fulfill his food needs. So it is natural that many countries whose governments give considerable attention to food-related problems both in terms of demand and supply. Research on demand for food commodities in Tulungagung Regency uses data from SUSENAS (National Socio-Economic Survey) in 2018 obtained from the Indonesian Central Bureau of Statistics. The model used in this study is the AIDS (Almost Ideal Demand System) model with the SUR (Seemingly Unrelated Regression) method. The results showed that the factors that influenced the demand for food commodities were rice prices, corn prices, soybean prices, mungbean prices, peanut prices for cassava prices, sweet potato prices, and total household expenditure. Price elasticity is elastic for food commodities (rice, corn, green beans, peanuts, cassava and sweet potatoes). Cross elasticity has a substitution relationship in each commodity and is also complementary in each commodity. Expenditure elasticity shows that all food commodities are normal goods.

Price and income elasticities of electricity in China: Estimation and policy implications

AbstractChina has been reforming the energy sector, especially the electricity industry. One of the important aims is to reform the cross‐subsidies (the industrial sector has been subsidizing the residential sector for decades), which requires policy‐makers have a good understanding of price and income elasticities of electricity. However, few studies have estimated China's price and income elasticities of electricity, partly due to limited micro data. This study estimates price and income elasticities of electricity in China using AIDS (almost ideal demand system) demand model, which is consistent with consumer theory and more flexible than other regression models. The AIDS demand model is estimated using provincial‐level data from 2006 to 2016 and the estimation results show that the uncompensated price elasticity is −0.062, and the estimated income elasticity of residents is 0.889. To better understand the welfare implications of cross‐subsidies, which requires an estimate of the price elasticity of demand in the industrial sector. Based on the estimated price elasticity of electricity, we simulate the consumer surplus under different pricing mechanisms. Ramsey pricing, as expected, generated the larger consumer surplus than actual pricing mechanism, which would provide guidance for the price reform of China's power industry.