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The Demand For Sweet Spreads: Demographic And Economic Effects For Detailed Commodities

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  • Helen, Dale
  • Willett, Lois Schertz
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    Abstract

    In this paper we estimate the price and income elasticities for five sweet spreads using a two-stage budgeting procedure. The first stage modeled the consumer's budget decision as a Tobit model, where total sweet spread expenditures are based on income and demographic variables. The second stage, including only those households with nonzero first stage expenditures, was treated as a standard consumer allocation problem using the AIDS model. To incorporate population demographics, the AIDS model was expanded by specifying the constant term as a linear function of demographic variables. The coefficients for the prices and expenditures are highly significant and demand is elastic for all five goods. The most significant demographic effects are due to household size, and female food shopper. The theoretical restrictions of homogeneity and symmetry were tested and rejected for the complete system.

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    Bibliographic Info

    Article provided by Northeastern Agricultural and Resource Economics Association in its journal Northeastern Journal of Agricultural and Resource Economics.

    Volume (Year): 15 (1986)
    Issue (Month): 2 (October)
    Pages:

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    Handle: RePEc:ags:nejare:29054

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    Web page: http://www.narea.org/
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    Keywords: Demand and Price Analysis;

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    1. Barnes, Roberta & Gillingham, Robert, 1984. "Demographic Effects in Demand Analysis: Estimation of the Quadratic Expenditure System Using Microdata," The Review of Economics and Statistics, MIT Press, vol. 66(4), pages 591-601, November.
    2. Wales, T. J. & Woodland, A. D., 1983. "Estimation of consumer demand systems with binding non-negativity constraints," Journal of Econometrics, Elsevier, Elsevier, vol. 21(3), pages 263-285, April.
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    Cited by:
    1. Bergtold, Jason S. & Peterson, Everett B., 2005. "Introducing Asymmetric Separability in the FAST Multistage Demand System," 2005 Annual meeting, July 24-27, Providence, RI 19497, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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