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U.S. Food and Nutrient Demand and the Effects of Agricultural Policies

  • LaFrance, Jeffrey T.

An econometric model of annual per capita U.S. food and nutrition demand is developed. The model is a flexible, full rank two Gorman polar form. It is strictly aggregable across income, demographic variables, and variations in micro preference parameters. Parametric conditions for global quasi-concavity of the (quasi-)utility function are derived. The model is implemented with annual time series data on U.S. per capita food consumption for the sample period 1918-1994. A battery of new test statistics are developed for and applied to the following hypotheses: (1) strict exogeneity of income or total expenditures; (2) global symmetry and negative semidefiniteness of the Slutsky substitution matrix; (3) parameter stability in a multivariate, nonlinear regression model based on within sample residuals; and (4) weak separability of food items from all other goods in the representative consumer's preference function. The empirical results are very encouraging with respect to the strictures of economic theory, heretofore a virtually unheard of outcome. The model is used to analyze the food and nutrient consumption and consumer welfare impacts of the U.S. dairy program.

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Paper provided by Department of Agricultural & Resource Economics, UC Berkeley in its series Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series with number qt52h9v4dq.

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Date of creation: 01 Jan 1999
Date of revision:
Handle: RePEc:cdl:agrebk:qt52h9v4dq
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  1. Jamison, John A., 1971. "Marketing Orders and Public Policy for the Fruit and Vegetable Industries," Food Research Institute Studies, Stanford University, Food Research Institute, issue 03.
  2. Lucas, Robert E B, 1975. "Hedonic Price Functions," Economic Inquiry, Western Economic Association International, vol. 13(2), pages 157-78, June.
  3. Jeffrey T. LaFrance & W. Michael Hanemann, 1989. "The Dual Structure of Incomplete Demand Systems," Monash Economics Working Papers archive-21, Monash University, Department of Economics.
  4. Laitinen, Kenneth, 1978. "Why is demand homogeneity so often rejected?," Economics Letters, Elsevier, vol. 1(3), pages 187-191.
  5. Barnett, William A, 1977. "Pollak and Wachter on the Household Production Function Approach," Journal of Political Economy, University of Chicago Press, vol. 85(5), pages 1073-82, October.
  6. Wu, De-Min, 1973. "Alternative Tests of Independence Between Stochastic Regressors and Disturbances," Econometrica, Econometric Society, vol. 41(4), pages 733-50, July.
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  8. J. A. Hausman, 1976. "Specification Tests in Econometrics," Working papers 185, Massachusetts Institute of Technology (MIT), Department of Economics.
  9. Jeffrey T. LaFrance & W. Michael Hanemann, 1989. "The Dual Structure of Incomplete Demand Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(2), pages 262-274.
  10. Stoker, Thomas M, 1993. "Empirical Approaches to the Problem of Aggregation Over Individuals," Journal of Economic Literature, American Economic Association, vol. 31(4), pages 1827-74, December.
  11. Pollak, Robert A., 1989. "The Theory of the Cost-of-Living Index," OUP Catalogue, Oxford University Press, number 9780195058703, July.
  12. Andrew C. Harvey, 1990. "The Econometric Analysis of Time Series, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 026208189x, June.
  13. Edgerton, David L., 1993. "On The Estimation Of Separable Demand Models," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 18(02), December.
  14. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762.
  15. Pollak, Robert A & Wachter, Michael L, 1975. "The Relevance of the Household Production Function and Its Implications for the Allocation of Time," Journal of Political Economy, University of Chicago Press, vol. 83(2), pages 255-77, April.
  16. Blackorby, Charles & Donaldson, David & Moloney, David, 1984. "Consumer's Surplus and Welfare Change in a Simple Dynamic Model," Review of Economic Studies, Wiley Blackwell, vol. 51(1), pages 171-76, January.
  17. Pudney, Steven E, 1981. "Instrumental Variable Estimation of a Characteristics Model of Demand," Review of Economic Studies, Wiley Blackwell, vol. 48(3), pages 417-33, July.
  18. Jeffrey T. LaFrance & Harry D. Gorter, 1985. "Regulation in a Dynamic Market: The U.S. Dairy Industry," Monash Economics Working Papers archive-34, Monash University, Department of Economics.
  19. Attfield, Clifford L. F., 1985. "Homogeneity and endogeneity in systems of demand equations," Journal of Econometrics, Elsevier, vol. 27(2), pages 197-209, February.
  20. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
  21. Howe, Howard & Pollak, Robert A & Wales, Terence J, 1979. "Theory and Time Series Estimation of the Quadratic Expenditure System," Econometrica, Econometric Society, vol. 47(5), pages 1231-47, September.
  22. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132.
  23. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  24. Leathers, Howard D., 1979. "A Primer On Nutrition Policy In The United States," Staff Papers 13268, University of Minnesota, Department of Applied Economics.
  25. Meisner, James F., 1979. "The sad fate of the asymptotic Slutsky symmetry test for large systems," Economics Letters, Elsevier, vol. 2(3), pages 231-233.
  26. van Daal, Jan & Merkies, Arnold H Q M, 1989. "A Note on the Quadratic Expenditure Model," Econometrica, Econometric Society, vol. 57(6), pages 1439-43, November.
  27. Lluch, Constantino, 1973. "The extended linear expenditure system," European Economic Review, Elsevier, vol. 4(1), pages 21-32, April.
  28. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-54, July.
  29. Ploberger, Werner & Kramer, Walter, 1992. "The CUSUM Test with OLS Residuals," Econometrica, Econometric Society, vol. 60(2), pages 271-85, March.
  30. Pollak, Robert A & Wales, Terence J, 1981. "Demographic Variables in Demand Analysis," Econometrica, Econometric Society, vol. 49(6), pages 1533-51, November.
  31. Ippolito, Richard A & Masson, Robert T, 1978. "The Social Cost of Government Regulation of Milk," Journal of Law and Economics, University of Chicago Press, vol. 21(1), pages 33-65, April.
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