erc/metu
INTERNATIONAL CONFERENCE IN ECONOMICS  IV
September 13-16, 2000, Ankara

Consumers' Selection of a Diet from Supermarket Goods

Cuma Akbay (The Ohio State University, USA)
Eugene Jones (The Ohio State University, USA)

Abstract

Applied economists are often called upon to conduct studies on food commodities. When income groups are considered, higher-income consumers, relative to lower-income ones, are often shown to have healthier diets for a given commodity. Higher-income consumers, for example, have been shown to use higher proportions of low-fat milk and low-fat salad dressing. However, studies that look at consumers' overall diets using nationwide food consumption data show similarity in the diets of all income groups. So, what explains gaps in nutritional intake for individual commodities, but nutritional neutrality for overall diets? This study provides answers.

Tradeoffs among commodities in a given market basket of goods is one possible explanation for similar overall diets among income groups. For example, higher-income consumers might purchase more healthy products at the bottom end of the food pyramid, but less healthy products at the top end of the pyramid. Using eight categories of food commodities, this study shows how these tradeoffs occur. The eight food categories used in this study are: ice cream, fluid milk, breakfast cereals, cooking oil and shortening, pourable salad dressing, salty snacks, and mayonnaise. The empirical results for this study are derived using a linear approximation of the Almost Ideal Demand System (LA/AIDS) and this model is based on weekly time-series data for June, 1997 to September, 1998. Several statistical problems associated with the AIDS model are addressed. Because the Stone index causes inconsistencies in parameter estimates, the model is modified as a LA/AIDS model. The Laspeyres price index is used to solve the problem of endogeneity and all prices are normalized to unity. At the point of normalization, Asche and Wessels (1997) have shown that the original AIDS and LA/AIDS models are identical. We are therefore confident that our results are statistically sound and economically meaningful.

Economic Research Center
Middle East Technical University
06531 Ankara Turkey
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e-mail: metuerc@metu.edu.tr