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Demand Estimation and Household’s Welfare Measurement: Case Studies on Japan and Indonesia

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  • Widodo, Tri

Abstract

This paper aims to estimate households’ demand function and welfare measurement under Linear Expenditure System (LES) in the case of Japan and Indonesia. In estimating the coefficients of the LES, this paper applies Seemingly Uncorrelated Regression (SUR) method. This paper gives some conclusions. First, for food consumption Indonesian households have the maximum marginal budget share on Meat and the minimum one on Fruits; meanwhile Japanese households have the maximum marginal budget share on Fish and shellfish and the minimum one on Dairy products and eggs. Indonesian households are ‘meat lover’ and Japanese households are ‘fish lover’. Second, Indonesian households have smaller gap between minimum food consumption (subsistence level) and average food consumption than Japanese households have. Third, with the same level of price increase on foods the simulation shows that in nominal-term (Yen, ¥) Japanese households get greater welfare decrease than Indonesian households get. However, in the percentage of total food expenditure, Indonesian households get greater welfare decrease than Japanese households get. Fourth, it is estimated that during the period 2000-2004 the changes of prices in living expenditure increased both Japanese All Households and Japanese Worker Households more than ¥ 4,500.

Suggested Citation

  • Widodo, Tri, 2006. "Demand Estimation and Household’s Welfare Measurement: Case Studies on Japan and Indonesia," MPRA Paper 78216, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:78216
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    File URL: https://mpra.ub.uni-muenchen.de/78216/1/MPRA_paper_78216.pdf
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    References listed on IDEAS

    as
    1. Deaton, Angus, 1986. "Demand analysis," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 3, chapter 30, pages 1767-1839, Elsevier.
    2. R. C. Geary, 1950. "A Note on "A Constant-Utility Index of the Cost of Living"," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 18(1), pages 65-66.
    3. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
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    Cited by:

    1. Anaïs Falk & Catherine Macombe & Denis Loeillet & Jean-Marc Deboin, 2022. "How Can a Company Assess Social Needs to Reduce Poverty among Its Workers? The Case of the Export Banana Industries," Sustainability, MDPI, vol. 14(17), pages 1-21, August.
    2. Briggs, Adam & Chowdhury, Shyamal, 2014. "Economic Development, Food Demand and the Consequences for Agricultural Resource Requirements (Indonesia)," 2014 Conference (58th), February 4-7, 2014, Port Macquarie, Australia 165808, Australian Agricultural and Resource Economics Society.
    3. repec:era:chaptr:2013-rpr-29-05 is not listed on IDEAS
    4. Pangaribowo, Evita Hanie & Tsegai, Daniel W., 2011. "Food Demand Analysis of Indonesian Households with Particular Attention to the Poorest," Discussion Papers 116748, University of Bonn, Center for Development Research (ZEF).

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    More about this item

    Keywords

    Linear Expenditure System (LES); Seemingly Uncorrelated Regression (SUR); Compensating Variation (CV); Equivalent Variation (EV).;
    All these keywords.

    JEL classification:

    • I0 - Health, Education, and Welfare - - General
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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