The Income And Price Sensitivity Of Diets Globally

This paper analyses detailed consumption patterns of food items in a large number of countries with a three-stage budgeting approach. Under the assumption of separable preferences, the first stage separates total consumption into food and non-food; the second splits food into the major food groups; and the third stage allocates consumption to the elementary goods within each food group. The model is implemented for the second two stages with 25 food items divided into 6 groups: staples, meats, dairy, fruit and vegetables, sweet things and other food. For each group, there is a system of conditional demand equations (with one equation for each elementary good), which depend on expenditure and prices within the group. The six systems are estimated with unpublished International Comparison Program data for more than 100 countries. These estimates are then combined with estimates of the group demand equations, which depend on total food consumption and prices indexes of the six groups, to give the overall income and price responses, conditional upon total food.