Estimation of Urban-Rural Expenditure and Household Size Elasticities of Food Items in Pakistan: - Evidence From PSLM Survey

This study evaluates the household food demand patterns among different income sorts in urban and rural areas of Pakistan and estimation of food expenditure and household size elasticities. The different income sorts are the Lower Income Group(≤ 8000), Lower-middle Income Group(8001-12000), Middle Income Group(12001-18000),Upper-middle Income Group (18001-35000) and Upper Income Group (35000+) Pakistani rupees respectively. For the analysis purpose the cross sectional data were taken from Pakistan Social and Living Standard Measurement Survey (PSLM) 2010-11 by Federal Bureau of Statistics (FBS), Government of Pakistan, Islamabad. Engel Expenditure elasticities are a powerful research tool in the household analysis. If expenditure on a certain item is proportional to income or total expenditure then the income elasticity of demand is better known as Engel elasticity is unity. The food expenditures are the sum of expenditures by each household on the following commodity groups: cereals, pulses, fruits, vegetables, dairy products, chicken, meat, fish, condiments, sugar, edible oils, drinks and miscellaneous food products. The household size and income elasticities are estimated to explain the food consumption trends in Pakistan. The results of the study indicate that all the income and household size elasticities are positive and significant at one percent level of significance. Results of the study also indicate that the urban food consumption is higher in the upper income group (IG) while households belonging to other classes of rural areas are more food responsive. Urban households depict higher size elasticities in overall, lower IG, lower middle IG and middle IG whereas households belonging to upper-middle IG and upper IG of rural area are also more food responsive.