Statistical Demand Functions for Food in the USA and the Netherlands

SUMMARY This paper reports results of an extensive analysis of statistical demand functions for food using household survey data and aggregate time-series data on food consumption in the USA and The Netherlands. Using the model put forward by Tobin (1950) for survey data, we find that socio-economic information on the composition, education, and status of households adds little to the explanation of food consumption. The income elasticity of food consumption decreases over time in the USA but increases in The Netherlands. Applying multivariate cointegration analysis to the time-series data, we find that strict price homogeneity, structural stability, and weak exogeneity of prices have to be rejected statistically at conventional significance levels, whereas weak exogeneity of food consumption cannot be rejected. The long-run income elasticity tends to decrease over time for US data and is roughly constant for Dutch data. The findings corroborate earlier findings for the survey data. The rejection of price exogeneity is consistent with Tobin’s model which treats prices as endogenous. #1997 John Wiley & Sons, Ltd.

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