Ideal Demand System Research Articles

Optimal Excise Tax on Indonesia's Unhealthy Food

A recent report by Indonesia's Ministry of Health shows that diabetes prevalence is doubled in the last decade, and it happens globally. Unhealthy food consumption is alleged to be the cause, and imposing taxes on unhealthy food to reduce its consumption. This study aims to analyze optimal taxation for unhealthy foods as a policy alternative to reduce the surge increase of diabetes in Indonesia. The study analyzes Indonesian consumption data on several types of food that fall into the unhealthy category by the World Health Organization. By estimating household demand for unhealthy food using the Almost Ideal Demand System (AIDS) and categorizing them based on income, we could simulate the optimal tax rate for unhealthy food and contemplate the pros and cons. The findings identified three food groups that fall into the unhealthy category: snacks, instant noodles, and processed meat, and all the groups have inelastic demand elasticity. Applying the Ramsey rule, this study estimates the optimal tax rate for each food at 12-13% and can increase the state revenue by IDR 4 trillion annually. Nevertheless, it is noteworthy that most instant noodle consumers were households in the bottom 40% of incomes, contrary to snacks and processed meat. The study advises considering income distribution when the excise tax will be applied by looking at a combination of food demand analysis with a tax-imposition simulation.

Estimation of Almost Ideal Demand System on Food Expenditure in Erbil inYear 2012

Based on household expenditure survey data for Erbil governorate in year (2012), the food expenditure function have been estimated via applying (OLS) method. The study sample constitutes of (1933) households by using Almost Ideal Demand System (AIDS) model. Then, expenditure and price elasticity of food demand have been derived from the estimated model after subjecting to traditional criteria. Overall the results were satisfactory, especially the compatibility of the sizes and signs of the elasticity, with theoretical and previous expectations. So, the results showed that there are another non-economic factors exists which effect on the food expenditure significantly like household size and its composition. Finally, the results have been used to predict the future demand on food. At the end of the study numbers of proposals and conclusions have been outlined, based on the estimated results.

Fish demand in Egypt: An analysis using Almost Ideal Demand System (AIDS)

Egypt has a vast water area of about 13 million acres, and the amount of fish production capacity reached 1.82 million t in 2017. This represents an increase by 6.8% compared with 2016; however, the increase in population growth rate has caused a shortage in meeting consumers’ needs by about 15.47%. This research aims at estimating demand elasticity for Tilapia, Bayad, and Catfish in Egypt as they are the most important fish items prevalent in the Nile River. The results show that the demand for fish in Egypt is price inelastic. This means that price changes have a small impact on the quantity demanded of fish. In addition, tilapia was identified as a necessary fish item in Egypt. The Hicksian cross-price elasticities identified tilapia and bayad as substitutes for catfish. Keywords: Almost Ideal Demand System, Demand elasticity, Fish demand

Linkages between Household Budget Allocations and Welfare Changes: Implications of Habit Formation and Price Effects

This study examines households’ habit formation in consumption and investigates how household budget allocations are related to welfare changes. The results of the dynamic almost ideal demand system show that there exist habit persistence in purchasing food, clothing, housing, and health items and depletion in other items. Regarding the price responsiveness, the results reveal that price changes result in household budget reallocations with varying income and substitution effects. Moreover, the compensating variations are used to measure welfare changes between 2003 and 2016. The results represent that the increased prices result in welfare losses despite households’ budget reallocations across all income quintiles.

Demand for selected plant-based protein among the staff of a tertiary institution in Nigeria

Increasing demand for animal protein has a negative consequences human health and the environment. Thus, the need for a replacement of animal protein with plant-based protein in human diet. The demand for selected plant-based protein (PBPs) (soybean, mushroom, potato, and cowpea) was therefore assessed. Data collected from 343 staffers of university of Ibadan were analysed using descriptive statistics and Quadratic Almost Ideal Demand System. Mushroom and soybean were luxury goods but demand for mushroom was more elastic than soybean. Potato was considered a necessary good. Expenditure elasticity for cowpea was however found to be just unitary. The selected plant-based proteins were normal goods. Furthermore, all the compensated own-price elasticities (except mushroom) were less than one (in absolute terms) indicating that they are price-inelastic. They ranged between (-0.14) for soybean and (-0.62) for potato. Hicksian elasticities showed that mushroom was a substitute for cowpea and potato. Cowpea and potato were also substitutes to each other. Socio-economic factors influencing demand were years of schooling, access to market, prices of the PBPs and marital status of the respondent.

Gender Gap in Labor Supply, Leisure, Consumption, and Home Production and National Policy in Japan

This study investigates single individuals’ different choices over time in terms of use (labor supply, home production time input, leisure) and consumption (market consumption goods, home production goods) and provides evidence to explain the differences. To this effect, we use the structural model of the Almost Ideal Demand System with a Cobb-Douglas home production function. The results are summarized as follows. Regarding labor supply, both women and men have the same working willingness in the labor market when women are paid as much as men. Overall, although the regional gender income gap appears different between major metropolitan areas and non-major metropolitan areas, our results indicate that the income gap would disappear by diminishing the wage gap. However, for home production, the gender gap persists when women apply the same conditions as men, although the gap is small. Policy implied that reducing the gender wage gap is an important tool to encourage single women to work as men in the workplace regardless of the area.

How to be sustainable in beef consumption - Exploring the factors. Case study

The aim of the paper is to explain beef consumption through the economic indicators and the prediction tendencies of beef consumption. There are countries like Slovakia that confirm the opposite trend despite the global trend of consumption growth. In terms of the ecosystems' sustainability, beef production should be adjusted accordingly, as in the case of Slovakia. We focus on the economic aspect of beef consumption from the perspective of sustainability. Commodity prices are considered to be a significant factor influencing consumption and the behaviour of beef consumers. Despite increasing income in Slovakia, consumption of beef covers only 30% of recommended doses in the year 2018. To achieve the objective of the research, we decided to use the calculation of price and income elasticity of food demand using the Almost Ideal Demand System (AIDS) model to analyse meat consumption trends. The findings confirm that beef consumption will decline in Slovakia in the following years, and it will be progressively replaced by pork and poultry meat.

Impact of taxes on purchases of close substitute foods: analysis of cross-price elasticities using data from a randomized experiment

ObjectiveTo examine the effects of health-related food taxes on substitution and complementary purchases within food groups, including from unhealthier to healthier alternatives and between brands.MethodsWe used data from a virtual supermarket experiment with data from 4,259 shopping events linked to varying price sets. Substitution or complementary effects within six frequently purchased food categories were analyzed. Products’ own- and cross-price elasticities were analyzed using Almost Ideal Demand System models.ResultsOverall, 37.5% of cross-price elasticities were significant (p < 0.05) and included values greater than 0.10. Supplementary and complementary effects were particularly found in the dairy, meats and snacks categories. For example, a 1% increase in the price of high saturated fat dairy was associated with a 0.18% (SE 0.06%) increase in purchases of low saturated fat dairy. For name- and home-brand products, significant substitution effects were found in 50% (n = 3) of cases, but only in one case this was above the 0.10 threshold.Conclusions/policy implicationsGiven the relatively low own-price elasticities and the limited substitution and complementary effects, relatively high taxes are needed to substantively increase healthy food purchases at the population level.Trial registrationThis study included secondary analyses; the original trial was registered in the Australian New Zealand Clinical Trials Registry ACTRN12616000122459.

Estimation the Almost Ideal Demand System for Egyptian potatoes Exports in the most Important Foreign Markets

Estimation the Almost Ideal Demand System for Egyptian potatoes Exports in the most Important Foreign Markets

676The impact of alcohol tax elimination policy on population health in Hong Kong

Abstract Background Extensive research has shown that taxes on alcohol reduces consumption and alcohol-related harm. Uniquely among high-income economies, the Hong Kong Government reduced alcohol taxes on wine and beer by half in 2007; and entirely waived all alcohol-related taxes in 2008. Methods We adapted the International Model of Alcohol Harms and Policies (InterMAHP) using Hong Kong data to evaluate the health impact of the tax elimination policy changes on alcohol pricing. Prevalence and consumption estimates were calculated from serial Behavioural Risk Factor surveys of health behaviours among the Hong Kong population. We applied the linear approximation of the Almost Ideal Demand System (AIDS) econometric model to estimate the elasticity of demand for on-trade and off-trade sales of alcohol (beer, wine, and spirits) using Euromonitor market sales data. We derived population attributable fractions and relative risks estimates from Hospital Authority morbidity and mortality records. Results Alcohol consumption and alcohol-related harms were higher for males. We found the policy change increased alcohol-attributable mortalities, predominately due to increases in cancer, cardiovascular disease, and injuries. The burden of disease was higher in older age groups. Conclusions Hong Kong pursued a policy of eliminating taxes on alcohol despite extensive evidence on the effectiveness of taxation as a policy tool. We find empirical evidence this policy change was associated with an increase in alcohol-related harms and detrimental to population health. Key messages The alcohol tax elimination policy in Hong Kong was associated with an increase in alcohol-related burden of disease. Reintroduction of alcohol taxes merits consideration.

Consumption and Beef Price Changes on Demand in East Nusa Tenggara, Indonesia

Households consume animal protein after carbohydrate food is fulfilled, moreover animal protein prices are increasing. This study aims to analyze the effect of rising beef prices on demand. The demand system approach uses the Quadratic Almost Ideal Demand System (QUAIDS) model. Estimation of parameters using Iterated non-linear Seemingly Unrelated Regression. The research data use the 2016 National Socio-Economic Survey (Susenas, 2016), amounting to 10,751 households. The results of the study concluded that beef is the third most elastic animal food after fresh fish and chicken meat. Fresh fish in the most elastic among all animal foods with a demand elasticity of 3.31%, followed by chicken, beef, milk powder, and eggs with demand elasticities of 1.55%, 1.62%, 1.29%, and 0.80%, respectively. Beef is a luxury item with an income elasticity of 1.59%, as well as fresh fish, chicken meat, and milk powder. While eggs are normal goods. Although fresh fish is more elastic than beef, beef marginal expenditure share (MES) is higher than fresh fish MES, so that in the long run, the increase in household income tends to increase beef consumption more than fresh fish.

Household Demand Analysis for Pakistan: Recent Evidence

The objective of this study is to analyze household demand system for Pakistan by estimating various elasticities of demand. This study combines nine different rounds of Household Integrated Economic Survey data to estimate Almost Ideal Demand System (AIDS). Household level data are supplemented with rich price information available for all the twelve months of the nine years. This approach yields efficient estimates of income and price elasticities, which are non-linear combinations of the parameters of AIDS. Standard errors for all the elasticity estimates are computed on the basis of Monte-Carlo simulations. The results show that household demand responses to income changes are similar between rural and urban households, while the response to price changes differ considerably. On average, rural households are found to be more responsive to price changes than the urban households. The study recommends that on equity grounds transport and communication and miscellaneous non-food goods and housing can be taxed more heavily as compared to other goods.

Demand for Meat in Indonesia: Censored AIDS Model

This study estimates the demand for meat in Indonesian urban households encompassing beef, goat, broiler chicken, and native chicken. We estimate the demand for meat using cross-sectional data from the 2013 Indonesian Socio-Economic Household Survey data, which records food expenditure for a week before the survey. Because of some zero expenditure, the Censored Almost Ideal Demand System (AIDS) using the consistent two-step estimation is applied. The estimated own-price elasticities indicate that all meat products are price-inelastic. Nonetheless, broiler chicken is the most responsive meat product while goat is the least responsive meat product to price changes. All meat products are normal good referring to the estimated income elasticities. However, Native chicken is the most responsive and goat is the most unresponsive to the income change. The estimated cross-price elasticities conclude that broiler chicken and beef are substitute goods. The policy simulation indicates that beef is a meat product that is unresponsive to price and income changes. Native chicken is the most responsive meat product to price and income change, followed by broiler chicken.

Demand Elasticities of Canned Tuna at Point of Sale of a Large Retail Chain in Southern Philippines: Implications for Sustainability Policy

New variants of canned skipjack tuna have been developed by large manufacturers of canned tuna in the Philippines. This study analyzes the expenditure and price elasticities of canned tuna and determines the implications for sustainable fishery. An AIDS (almost ideal demand system) model incorporating an income group variable was used to estimate these elasticities. This study utilized a pooled time series data of 459 weekly point-of-sale observations from 2010–2012 of three store branches of a large supermarket chain in southern Philippines. The point-of-sale data suggest that canned tuna consumption is composed mostly of tuna in sauce with vegetables followed by tuna in oil and tuna in sauce without vegetables. For both high- and low-income groups, the expenditure elasticities have the expected positive signs – indicating that as the income of consumers’ increases, the quantity demanded for canned tuna in three product mediums also increases. For high-income consumers, consumption of tuna in sauce with and without vegetables is more responsive to income changes. The own-price elasticities of the three product mediums across high- and low-income store branches have negative signs – suggesting that as their own price increases, the quantity demanded for these products decreases. The cross-price elasticities suggest that tuna in sauce with vegetables is a substitute for tuna in oil and in sauce without vegetables for both income groups. Thus, promoting more use of vegetables through product development may lead to a lower volume of tuna meat used in canned tuna products, which contributes to addressing tuna resource sustainability

Analysis of the Demand for Berries in Mexico: An Application of the Almost Ideal Demand System (AIDS) Model

Objective: To identify the factors affecting the demand for berries in Mexican households, as well as the behavior in face of variations in economic income. Design/Methodology/Approach: In order to analyze the demand, microdata were used from the National Income-Expenditure Survey of Households 2018 (Encuesta Nacional Ingreso Gasto de los Hogares, ENIGH) from the National Institute of Statistics and Geography (Instituto Nacional de Estadística, Geografía e Informática, INEGI), and for its modelling the Almost Ideal Demand System (AIDS) model was used. Results: Because of their Marshallian elasticity, berries are an elastic good (-1.0316), and because of their expenditure elasticity they are a luxury good (1.0691). In terms of crossed Marshallian elasticities, sweet fruits and sugary beverages were identified as substitute goods with elasticity of 0.0013 and 0.0380, respectively, while semi-acid fruits and melons would be complementary goods, with elasticities of -0.0191 and -0.0184, respectively. Study Limitations/Implications: Given that most of the time series of the berries lack disaggregation and sufficient information, it is difficult to analyze each component of the group separately; therefore, it was decided to analyze the group of berries and its relationship with other goods; in addition, the ENIGH database was selected, which provides more information. Conclusions: There are state differences in the response to changes in prices and income with regard to the demand for berries, so that facing a generalized increase in household income consumption would increase much more in the center of the country than in the south-southeast.

Measuring Price and Income Elasticity of Demand Function of the Iranian Imports

Investigating the import demand function has particular importance in identifying the macroeconomic models and effectiveness and commercial efficiencies of the Iranian economy. For this reason, one of the major issues that can be addressed in the field of importing goods is the estimation of import demand function and investigating impacting factors on imports. Therefore, in this paper, throughout using seasonal data for the period 1992-2017 and applying the almost ideal demand system (AIDS) and using seemingly unrelated regression (SUR) econometric technique, we have estimated import price and income elasticities for five commodity groups based on one-digit tariffs code for the Iranian economy. The empirical results indicated that the import allocation pattern is single-stage and depends on the domestic sales. Also, the own-price elasticities had a negative sign which supports import behavior. Cross-price elasticities also showed a poor complementarity between the Other portable and metal commodities and, Social & personal services and Financial & business Services, domestic sales with Agricultural, forestry & fishing products, Other portable & metal commodities and Financial & business Services groups. The expenditure elasticities in five commodity groups were significant, except the first group, which implying effectiveness of demand for each commodity groups relative to income.

Posisi Kopi Robusta Indonesia di Pasar Jerman Menggunakan Metode Linear Approximate Almost Ideal Demand System

Indonesia is one of the top coffee producers in the world. The major markets for Indonesian coffee are European Union (EU), then Germany is the largest importing country. This research analyzed the position for Indonesian robusta coffee in Germany among Vietnam and India as the major producers of robusta coffee as Indonesia. The econometric model of the Linear Approximate Almost Ideal Demand System was used to estimate a position for Indonesian robusta coffee among its competitors. The analysis utilized time-series data from 1996 to 2017. The results of the study showed that the main exporting countries, including Indonesia, tended to have lower import tariffs than other countries, not the main exporters. The demand for imported coffee beans was generally influenced by the prices of major exporters, but demand for imported roasted coffee was not affected by the prices of major importing countries. Indonesian coffee beans in the German market was elastic, while roasted coffee was inelastic. Indonesian coffee competed with Vietnam both for coffee beans and roasted coffee. The expenditure elasticity of Indonesian coffee beans was positive and Indonesian roasted coffee was negative.

Price and expenditure elasticity of cigarette demand in El Salvador: a household-level analysis and simulation of a tax increase

BackgroundIn El Salvador, 8.8% of adults 15 years and older smoke cigarettes. Little is known about the sensitivity of cigarette consumption among the adults in El Salvador to tax and...

The energy rebound effect of residential buildings: Evidence from urban and rural areas in China

Technological progress in energy efficiency is generally considered as an effective measure to address climate change issues. However, the expected results of such progress might be impacted by the rebound effect. Employing the linear approximation of the Almost Ideal Demand System (LA-AIDS) model, this paper aims to measure the direct rebound effect of residential buildings, considering the differences in the rebound effect for residential buildings between urban and rural China over the period 1994–2016. The empirical results reveal the magnitudes of direct rebound effect for residential energy consumption. The anticipated energy savings in residential buildings cannot be fully achieved in either urban or rural areas, and even significant “back-fire” effect exists in rural China. More specifically, the magnitudes of the rebound effect for residential buildings in urban areas fluctuate between 79.43% and 110.00%, while that in rural areas increase from 115.28% to 120.40%. The main reason of rebound effect is that the energy demand for residential buildings would increase when energy efficiency improves. This study provides a significant reference for the formulation of more targeted policies to achieve the anticipated energy savings, such as development of energy efficiency education program for urban residents and clean energy project for rural residents.

Demand for animal source of food in Central Java, Indonesia

Consumption of protein was often used as an indicator of household welfare. This study analyzed the impact of price andincome changeon demand foranimal food in rural households in Central Java, using the Quadratic Almost Ideal Demand System model approach. The research data used data from the National Socio-Economic Survey, totalling13, 872 households. The output appeared that a one percent increase in animal food prices reduced the demand for eggs, chicken, beef, fish, and milk by 0.505%, 1.281%, 4.099%, 3.424%, and 1.915%, respectively. The most elastic animal food group is beef, followed by milk, fish, chicken, and eggs with income elasticities of 3.278%, 2.339%, 2.156%, 1.411%, and 0.556%. All animal food is a luxury item except eggs, which are normal goods. Beef is a substitute for fish, chicken, and eggs, while milk is complementary. The price policy is more effective compared to the income policy for rural Central Java. Rural households in Central Java very responsive to changes in price.