Demand for Beef and Chicken Products: Separability and Structural Change
01 Aug 1988-American Journal of Agricultural Economics (Oxford University Press)-Vol. 70, Iss: 3, pp 521-532
TL;DR: In this article, the authors investigated whether consumers allocate expendi- tures among meats by animal origin or by product type, and did disaggregation of meat into products in a meat demand model give insight into the causes of structural change.
Abstract: Several studies have indicated that the recent shift from beef to poultry in consumption is not entirely caused by changes in rela tive prices or income (Braschler, Chavas, Dahlgran, Hudson and Vertin, Moschini and Meilke, Frank, Thurman). Most studies of structural change have focused on red meat consumption; only Thurman has looked closely at the poultry market, and no one has considered poultry products. Yet, the mix of chicken products marketed changed dramat ically during the last twenty years and should have influenced aggregate meat demand. The share of broiler slaughter marketed as whole birds declined from 74% in 1965 to 28% in 1985, while cut-up parts and processed chick en products increased from 26% to 72%. Whole birds are inferior goods, and cut-up parts and processed chicken are normal goods (Haidacher et al.). The shift in chicken prod uct mix away from whole birds should have increased the preference for total chicken. In this article two related questions are ad dressed. First, do consumers allocate expendi tures among meats by animal origin or by product type? Second, does disaggregation of meat into products in a meat demand model give insight into the causes of structural
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TL;DR: In the literature, a variety of approaches have been used to calculate demand elasticities in almost ideal demand system (AIDS) models of demand as mentioned in this paper, and some of these approaches may lead to significant errors.
Abstract: In the literature, a variety of approaches have been used to calculate demand elasticities in almost ideal demand system (AIDS) models of demand. It is common to estimate the linear approximate almost ideal demand system (LA/AIDS) instead of the AIDS. When the LA/AIDS is estimated, all of the previously reported approaches to compute elasticities are theoretically incorrect. This paper presents correct formulas for LA/ AIDS elasticities and illustrates the potential errors from using incorrect computing The almost ideal demand system (AIDS) of Deaton and Muellbauer (1980a,b) has become popular in recent years (Anderson and Blundell; Blanciforti and Green 1983a,b; Blanciforti, Green, and King; Chalfant; Eales and Unnevehr; Fujii, Khaled, and Mak; Fulponi, Heien and Willett; Murray; Parsons; Ray). A variety of approaches to computing elasticities has been used, and some of the approaches may lead to significant errors. This paper clarifies the differences between alternative approaches to estimating demand elasticities in AIDS models.
582 citations
TL;DR: The Stone index typically used in estimating linear almost ideal demand systems is not invariant to changes in units of measurement, which may seriously affect the approximation properties of the model as mentioned in this paper.
Abstract: The Stone index typically used in estimating linear almost ideal demand systems is not invariant to changes in units of measurement, which may seriously affect the approximation properties of the model. A modification to the Stone index, or use of a regular price index instead, are both desirable practices in estimating linear AI models.
455 citations
TL;DR: Although health and nutritional value scored relatively low in terms of importance during the purchasing and consumption stages of minimally processed vegetables, consumers with a high awareness of the relationship between food and health attach significantly more importance to these credence attributes.
446 citations
TL;DR: In this article, a theoretical model of consumer response to publicized food safety information on meat demand is developed with an empirical application to U.S. meat consumption, and the authors find that the average response to food safety concerns is small, especially in comparison to price effects, and to previous estimates of health related issues.
Abstract: A theoretical model of consumer response to publicized food safety information on meat demand is developed with an empirical application to U.S. meat consumption. Evidence is found for the existence of pre-committed levels of consumption, seasonal factors, time trends, and contemporaneous own- and cross-commodity food safety concerns. The average demand response to food safety concerns is small, especially in comparison to price effects, and to previous estimates of health related issues. This small average effect masks periods of significantly larger responses corresponding with prominent food safety events, but these larger impacts are short-lived with no apparent food safety lagged effects on Food safety concerns in the United States have dramatically increased in the past decade with regard to incidences of contaminated meat products. Concerns have arisen because contaminated meat products can result in serious risk to the well being and health of consumers. Contamination comes from a myriad of sources, including but not limited to, outbreaks of Listeria monocytogenes, Escherichia coli (E. coli), and Salmonella (Centers for Disease Control and Prevention). Food safety problems are not isolated to the United States as other unsafe contaminates in meats have emerged across the world, including highly publicized outbreaks of Bovine Spongiform Encephalopathy (BSE) in Europe. The potential impacts of publicized food safety events on consumer’s demand for meat products in the United States include own-effects on the demand for the contaminated meat involved as well as cross-effects impacting the demand for other meats. The objective of this article is to investigate whether publicized food safety concerns surrounding beef, pork, and poultry (chicken and turkey) have impacted meat consumption. Food safety indices are constructed separately for beef, pork, and poultry
426 citations
TL;DR: In this paper, media coverage of BSE was incorporated in a dynamic AIDS model of meat demand, and it was found that the publicity which BSE has received had significant effects on the allocation of consumer expenditure among the meats.
Abstract: Indices of media coverage of BSE are incorporated in a dynamic AIDS model of meat demand. The publicity which BSE has received is found to have had significant effects on the allocation of consumer expenditure among the meats. A short-run impact has been identified which accounts in large part for the discernible drop in the market share of beef in the early 1990s. And more important, there also appears to be a significant long-run impact of BSE, which by the end of 1993 has reduced the beef market share by 4.5%.
302 citations
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TL;DR: In this paper, a method of estimating the parameters of a set of regression equations is reported which involves application of Aitken's generalized least-squares to the whole system of equations.
Abstract: In this paper a method of estimating the parameters of a set of regression equations is reported which involves application of Aitken's generalized least-squares [1] to the whole system of equations. Under conditions generally encountered in practice, it is found that the regression coefficient estimators so obtained are at least asymptotically more efficient than those obtained by an equation-by-equation application of least squares. This gain in efficiency can be quite large if “independent” variables in different equations are not highly correlated and if disturbance terms in different equations are highly correlated. Further, tests of the hypothesis that all regression equation coefficient vectors are equal, based on “micro” and “macro” data, are described. If this hypothesis is accepted, there will be no aggregation bias. Finally, the estimation procedure and the “micro-test” for aggregation bias are applied in the analysis of annual investment data, 1935–1954, for two firms.
7,637 citations
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TL;DR: The Almost Ideal Demand System (AIDS) as mentioned in this paper is a first-order approximation of the Rotterdam and translog models, which has been used to test the homogeneity and symmetry restrictions of demand analysis.
Abstract: Ever since Richard Stone (1954) first estimated a system of demand equations derived explicitly from consumer theory, there has been a continuing search for alternative specifications and functional forms. Many models have been proposed, but perhaps the most important in current use, apart from the original linear expenditure system, are the Rotterdam model (see Henri Theil, 1965, 1976; Anton Barten) and the translog model (see Laurits Christensen, Dale Jorgenson, and Lawrence Lau; Jorgenson and Lau). Both of these models have been extensively estimated and have, in addition, been used to test the homogeneity and symmetry restrictions of demand theory. In this paper, we propose and estimate a new model which is of comparable generality to the Rotterdam and translog models but which has considerable advantages over both. Our model, which we call the Almost Ideal Demand System (AIDS), gives an arbitrary first-order approximation to any demand system; it satisfies the axioms of choice exactly; it aggregates perfectly over consumers without invoking parallel linear Engel curves; it has a functional form which is consistent with known household-budget data; it is simple to estimate, largely avoiding the need for non-linear estimation; and it can be used to test the restrictions of homogeneity and symmetry through linear restrictions on fixed parameters. Although many of these desirable properties are possessed by one or other of the Rotterdam or translog models, neither possesses all of them simultaneously. In Section I of the paper, we discuss the theoretical specification of the AIDS and justify the claims in the previous paragraph. In Section II, the model is estimated on postwar British data and we use our results to test the homogeneity and symmetry restrictions. Our results are consistent with earlier findings in that both sets of restrictions are decisively rejected. We also find that imposition of homogeneity generates positive serial correlation in the errors of those equations which reject the restrictions most strongly; this suggests that the now standard rejection of homogeneity in demand analysis may be due to insufficient attention to the dynamic aspects of consumer behavior. Finally, in Section III, we offer a summary and conclusions. We believe that the results of this paper suggest that the AIDS is to be recommended as a vehicle for testing, extending, and improving conventional demand analysis. This does not imply that the system, particularly in its simple static form, is to be regarded as a fully satisfactory explanation of consumers' behavior. Indeed, by proposing a demand system which is superior to its predecessors, we hope to be able to reveal more clearly the problems and potential solutions associated with the usual approach.
4,620 citations
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01 Jan 1980TL;DR: The Classical Inference Approach for the General Linear Model, Statistical Decision Theory and Biased Estimation, and the Bayesian Approach to Inference are reviewed.
Abstract: SAMPLING THEORY AND BAYESIAN APPROACHES TO INFERENCE. The Classical Inference Approach for the General Linear Model. Statistical Decision Theory and Biased Estimation. The Bayesian Approach to Inference. INFERENCE IN GENERAL STATISTICAL MODELS AND TIME SERIES. Some Asymptotic Theory and Other General Results for the Linear Statistical Model. Nonlinear Statistical Models. Time Series. DYNAMIC SPECIFICATIONS. Autocorrelation. Finite Distributed Lags. Infinite Distributed Lags. SOME ALTERNATIVE COVARIANCE STRUCTURES. Heteroskedasticity. Disturbance--Related Sets of Regression Equations. Inference in Models that Combine Time Series and Cross--Sectional Data. INFERENCE IN SIMULTANEOUS EQUATION MODELS. Specification and Identification in Simultaneous Equation Models. Estimation and Inference in a System of Simultaneous Equations. Multiple Time Series and Systems of Dynamic Simultaneous Equations. FURTHER MODEL EXTENSIONS. Unobservable Variables. Qualitative and Limited Dependent Variable Models. Varying and Random Coefficient Models. Non--Normal Disturbances. On Selecting the Set of Aggressors. Multicollinearity. Appendices.
4,469 citations
"Demand for Beef and Chicken Product..." refers background in this paper
...For detailed developments of the notion the reader is referred to Leontief, Sono (1945, 1961), Deaton and Muellbauer (1980b), Green, and Gorman (1959, 1976)....
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TL;DR: The finite sample properties of an asymptotically efficient technique (JASA, June 1962) for estimating coefficients in certain generally encountered sets of regression equations are studied in this paper.
Abstract: The finite sample properties of an asymptotically efficient technique (JASA, June, 1962) for estimating coefficients in certain generally encountered sets of regression equations are studied in this paper. In particular, exact first and second moments of the asymptotically efficient coefficient estimator are derived and compared with those of the usual least squares estimator. Further, the exact probability density function of the new estimator is derived and studied as a function of sample size. It is found that the approach to asymptotic normality is fairly rapid and that for a wide range of conditions an appreciable part of the asymptotic gain in efficiency is realized in samples of finite size.
676 citations
572 citations