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Demand for Food-Away-From-Home: A Multiple Discrete/Continuous Extreme Value Model

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  • Richards, Timothy J.
  • Mancino, Lisa

Abstract

Obesity is a complex problem with many causes, from genetic and behavioral disorders to environmental factors, including access to calorie-dense fast food meals. Economists and epidemiologists disagree on the importance of access to fast food as a causal factor for obesity, but agree that any policy regulating access to fast food will likely use the price system, through taxes or other means to raise the relative cost of buying fast food. Yet, little is known of the structure of demand for food-away-from-home (FAFH). This study provides estimates of the price-elasticity of demand for four di¤erent types of FAFH using a novel new dataset from NPD, Inc. By including physiological measures of obesity, physical activity and health status as additional regressors in an instrumental variables framework, we control for important sources of observed heterogeneity. We nd that all types of FAFH are price elastic in demand, but ne dining is highly elastic while fast food is nearly unit elastic. Food-at-home (FAH), on the other hand, is relatively elastic. Critically, cross-price elasticities of demand show little willingness to substitute between FAH and any type of FAFH. When prices are rising, consumers prefer to change the type of restaurant they visit, rather than forego the experience entirely. As shown elsewhere in the literature, therefore, taxing fast food is likely to be counterproductive.

Suggested Citation

  • Richards, Timothy J. & Mancino, Lisa, 2011. "Demand for Food-Away-From-Home: A Multiple Discrete/Continuous Extreme Value Model," 2012 AAEA/EAAE Food Environment Symposium, May 30-31, Boston, MA 123390, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaeafe:123390
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    References listed on IDEAS

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    1. David M. Cutler & Edward L. Glaeser & Jesse M. Shapiro, 2003. "Why Have Americans Become More Obese?," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 93-118, Summer.
    2. Bhat, Chandra R., 2005. "A multiple discrete-continuous extreme value model: formulation and application to discretionary time-use decisions," Transportation Research Part B: Methodological, Elsevier, vol. 39(8), pages 679-707, September.
    3. Chou, Shin-Yi & Grossman, Michael & Saffer, Henry, 2004. "An economic analysis of adult obesity: results from the Behavioral Risk Factor Surveillance System," Journal of Health Economics, Elsevier, vol. 23(3), pages 565-587, May.
    4. Amemiya, Takeshi, 1974. "Multivariate Regression and Simultaneous Equation Models when the Dependent Variables Are Truncated Normal," Econometrica, Econometric Society, vol. 42(6), pages 999-1012, November.
    5. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, Fall.
    6. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-890, July.
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    Keywords

    Food Consumption/Nutrition/Food Safety;

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