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A latent variable model of consumer taste determination and taste change for complex carbohydrates

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  • X. M. Gao
  • Timothy Richards
  • Albert Kagan

Abstract

Despite evidence that aggregate consumption of complex carbohydrates has risen over the last decade, food consumption surveys suggest that fewer households are consuming less bread, pasta rice, potatoes and corn. This paper estimates systems of complex carbohydrae demand using cross-sectional data from 1977-78 and 1987-88 in order to explain this paradox. Changes in demand that are not explained by changes in prices or income are explained by variations in taste. Because tastes cannot be directly observed, the paper uses a multiple indicator and multiple cause (MIMIC) model to construct a suitable proxy variable. In the MIMIC approach, the 'indicators' are residuals from a household demand function that includes prices and incomes as explanatory variables, while household and demograhic proxies are 'cause' variables. The objectives in applying the MIMIC model are to determine the effect of consumer tastes on complex carbohydrate demand and, comparing cross-sectional survey data from two different periods, test the hypothesis that these tastes change over time. The data consist of US complex carbohydrate prices and expenditures, taken from the USDA Household Food Consumption Surveys in 1977-78 and 1987-88. The results show that structural changes in demand, or those that are not explained by changes in price, income, or the cause variables, led to an increase in complex carbohydrate demand of 5% from 1977-78 to 1987-88. However, changes in demand explained by the cause variables cause demand to fall by 9%.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 29 (1997)
Issue (Month): 12 ()
Pages: 1643-1654

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Handle: RePEc:taf:applec:v:29:y:1997:i:12:p:1643-1654

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  10. Huang, Kuo S., 1985. "U.S. Demand for Food: A Complete System of Price and Income Effects," Technical Bulletins 157014, United States Department of Agriculture, Economic Research Service.
  11. Lewbel, Arthur, 1985. "A Unified Approach to Incorporating Demographic or Other Effects into Demand Systems," Review of Economic Studies, Wiley Blackwell, vol. 52(1), pages 1-18, January.
  12. Goodwin, Harold L., Jr. & Fuller, Stephen W. & Capps, Oral, Jr. & Asgill, Oladimagi W., 1988. "Factors Affecting Fresh Potato Price In Selected Terminal Markets," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 13(02), December.
  13. Maddala, G. S. & Trost, R. P., 1981. "Alternative formulations of the Nerlove-Press models," Journal of Econometrics, Elsevier, vol. 16(1), pages 35-49, May.
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Cited by:
  1. Quagrainie, Kwamena K. & McCluskey, Jill J. & Loureiro, Maria L., 2001. "Reputation And State Commodity Promotion: The Case Of Washington Apples," 2001 Annual meeting, August 5-8, Chicago, IL 20592, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Ming-Feng Hsieh & Paul D. Mitchell & Kyle W. Stiegert, 2009. "Potato demand in an increasingly organic marketplace," Agribusiness, John Wiley & Sons, Ltd., vol. 25(3), pages 369-394.
  3. Dhraief, Mohamed Zied & Oueslati, Meriem & Dhehibi, Boubaker, 2012. "Meat And Fish Demand In Tunisia: Economic And Socio-Demographic Factors Effects," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126432, International Association of Agricultural Economists.
  4. Acharya, Ram N. & Molina, Ignacio, 2004. "Testing For A Change In Consumer Tastes For Fresh Fruits And Vegetables: A Structural Latent Variable Approach," 2004 Annual meeting, August 1-4, Denver, CO 20127, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  5. Dhehibi, Boubaker & Gil, Jose Maria & Angulo, Ana Maria, 2003. "Nutrient Effects On Consumer Demand: A Panel Data Approach," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25881, International Association of Agricultural Economists.
  6. Boubaker Dhehibi & Gil, J. & Angulo, A.Mª & Mur, J., 2001. "Calidad Nutricional y demanda de carnes en España: un enfoque con datos de panel," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 18, pages 21-39, Agosto.

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