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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%.

Suggested Citation

  • X. M. Gao & Timothy Richards & Albert Kagan, 1997. "A latent variable model of consumer taste determination and taste change for complex carbohydrates," Applied Economics, Taylor & Francis Journals, vol. 29(12), pages 1643-1654.
  • Handle: RePEc:taf:applec:v:29:y:1997:i:12:p:1643-1654
    DOI: 10.1080/00036849700000040
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    Cited by:

    1. 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.
    2. 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 126710, International Association of Agricultural Economists.
    3. 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.
    4. Rieger, Jörg & Kuhlgatz, Christian & Anders, Sven, 2016. "Food scandals, media attention and habit persistence among desensitised meat consumers," Food Policy, Elsevier, vol. 64(C), pages 82-92.
    5. Rieger, Jorg & Kuhlgatz, Christian, 2015. "Analyzing Consumer Demand During a Food Scandal: The Case of Dioxin Contaminated Feed in Germany and the Media," 2015 Conference, August 9-14, 2015, Milan, Italy 212292, International Association of Agricultural Economists.
    6. 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).
    7. Radwan, Amr & Gil, Jose M., 2015. "Can Price Intervention Policies Improve Diet Quality in Spain?," 2015 Conference, August 9-14, 2015, Milan, Italy 212698, International Association of Agricultural Economists.
    8. 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.
    9. 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).

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