Analysis of Food Consumption Behavior by Japanese Households

The objective of this research is to analyze the food consumption patterns and to conduct econometric analysis of food demand structure in Japan. In this study, we pay special attention to the questions on whether or not rice is an inferior good as previous researchers have so claimed and to what extent Japanese food consumption pattern has been westernized. We use the cross-sectional household data, Annual Report on the Family Income and Expenditure Survey (FIES) in 1997 compiled by the Statistics Bureau, Management and Coordination Agency in Japan. For major 11 food items, the total number of observations used for estimation is 95,223. Food items are non-glutinous rice, bread, noodle, fresh fish, and shellfish, fresh meat, milk, eggs, fresh vegetables, fresh fruits, fats and oil, and food away from home. For meat items, the total number of observations used for estimation is 94,200, and items in interest are beef, pork, poultry, ground meat, ham, sausage, and bacon. In order to deal with the zero-consumption problem associated with household-level microdata, we apply various single equation models: Working-Leser model estimated by OLS, Heckman’s sample selection model, and Tobit mode. For a complete demand system analysis, we apply the linearly approximated almost ideal demand system (LA/AIDS).Additionally, we apply the nonlinear almost ideal demand (AIDS) system. Empirical results from the major 11 food items show that the expenditure elasticity of rice is positive and close to one. This proves that rice consumed in Japan is a normal good, contrary to the results from preceding studies. Marshallian uncompensated and Hicksian compensated own-price elasticities for rice are highly elastic in all models; on the other hand, the own price elasticity for meat is relatively price inelastic. Fresh meats and rice are mild complements in all models; however, fresh fish and rice show the mixed results with repect to their substitution pattern. Results from meat items show that the expenditure elasticity of beef is greater than unity, while other meat products are inelastic. Additionally, the expenditure and price elasticities look very similar to that of Western nations. This study shows that the Japanese meat consumption pattern has become westernized.