11

An Empirical Analysis of Demand and

Demographics for Healthy Eating in Ireland,

Categorised Using the Food Pyramid.

Thursday 5th October 2009

Pamela MurphyDr. Carol Newman, TCD

Dr. Maeve Henchion, AFRCDr. Sinead McCarthy, AFRC

Research Question and Contribution

• To investigate the impact of economic change in food expenditure during the decade 1994 to 2004 with referance to the food pyramid

• Determine if Irish food choices are changing by examining types of food choice, with a paticular emphasis of a movement towards or away from healthy eating. • To model an aggregate food demand system whilst also considering the potential effects of demographic and socio-economic factors.

Data Sources

Irish Household Budget Surveys (HBS) from 1994, 1999 and 2004. Collected by the Central Statistics Office (CSO).2 week food expenditure diary.Approximately 7,500 households surveyed every 5 years.Representative sample of households in the Republic of Ireland.

Methodology• Recode approx 350 food and beverage items from HBS using the Eurocode method of food classification and the food pyramid.

• Adjust data for inflation using CPI index (2006 = base year).

Adjust data for household size using OECD equivalence scale.

• Dummy variables were constructed for all explanatory variables

with more than 2 categories.

• Use seemingly unrelated regressions (SUR) to simultaneously regress

all 5 dependent food groups for each of the three survey years.

• Determine food demand using Almost Ideal Demand System (AIDS)

model. Developed by Deaton & Muellbauer in 1980

General Model :

n

jijijii PXpw

1

)/ln(ln

AIDS Model - Empirical Specifications

Where:

iw

i

ij

jp

X

is the budget share associated with the th good

is the constant (intercept) co-efficient in the th share equation. i

is the slope (price) co-efficient associated with the in the th good, in the th share equation.

is the price of the th good.j

j

X

qpw iii

is the total expenditure on goods in the system of goods given by:

i

n

iiqpX

1

i

is the expenditure co-efficient

P is a price index

i

AIDS Model & SUR

• AIDS models concentrates on price and expenditure. This project is more interested in explaining how demographics affect the

decision to consume certain food groupings, thus a modified format of the AIDS model will be used.

• Households must allocate their total spending among goods, given prices

• Total expenditure for household is defined by:

• Seemingly Unrelated Regression (Micheline, 1998)

(Rank 3 demand system) This will look at the relationship between the budget share, disposable income and disposable income squared plus other explanatory variables, including a number of proxy variables.

nnpp .....1

h

n

i

hii

h qpX1

)(/)(/lnln pbpaypw iiiijjii 2)(/ln pay

Dependent Variables

Oils & fatsSugar & chocolateBeveragesMiscellaneous TopAlcoholTakeaway meals

EggsTopmiddle

Meat

Milk Middle

VegetablesFruit

Endmiddle

GrainsPulses & nuts EndPotatoes

7

Results – (SUR)VARIABLES bstop bstopmiddle bsmiddle bsendmiddle bsend

seasons1 -9.472*** -0.574*** -0.571*** -0.135 -0.959***

seasons2 -4.598*** -0.714*** -0.493*** 0.338*** -0.716***

seasons3 -0.775 -0.711*** -0.687*** 0.175** -0.324***

dflndisincome 13.03*** 0.534*** 0.431*** 0.371*** 0.0893

urban 10.50*** -2.125*** -1.804*** 0.106 -0.747***

female -5.695*** 0.160 0.427*** 0.931*** 0.418***

medicalcard -8.071*** -0.871*** -0.993*** -0.373*** -0.512***

hldtype2 -10.88*** 3.415*** 2.762*** 1.303*** 1.289***

hldtype3 -19.36*** 2.640*** 2.851*** 0.313* 1.212***

hldtype4 -14.45*** 1.318*** 1.483*** -0.440*** 0.696***

schooling2 -4.149*** 1.544*** 0.847*** -0.849*** 0.139

schooling3 -5.738*** 1.308*** 0.825*** -1.604*** 0.284*

Results (SUR) - continued

VARIABLES bstop bstopmiddle bsmiddle bsendmiddle bsend

agegroups2 -10.54*** 2.788*** 2.420*** 0.970*** 1.227***

agegroups3 -21.36*** 5.049*** 4.229*** 1.688*** 2.287***

agegroups4 -26.03*** 7.423*** 5.768*** 2.369*** 2.964***

agegroups5 -30.68*** 9.028*** 6.919*** 3.087*** 3.042***

agegroups6 -35.82*** 9.989*** 7.923*** 3.004*** 3.370***

agegroups7 -39.94*** 7.745*** 5.994*** 2.266*** 2.702***

home2 4.100*** 1.227*** 1.036*** 0.148 0.961***

home3 0.0432 2.327*** 1.661*** 0.447*** 1.035***

motor2 4.547*** 0.648*** 0.552*** 0.438*** 0.0795

motor3 10.55*** 0.903*** 0.852*** 0.542*** 0.252

motor4 17.92*** 0.328 0.174 -0.0547 -0.256

marriage -7.124*** -0.264 -0.479** -0.244** -0.501***

Standard errors not shown *** p<0.01, ** p<0.05, * p<0.1

Results (SUR) - continued

VARIABLES bstop bstopmiddle bsmiddle bsendmiddle bsend

shopfreq2 -1.140 -0.765*** -0.833*** -0.200* -0.793***

shopfreq3 -3.649*** -1.239*** -1.073*** -0.0496 -1.010***

shopfreq4 -1.648 -2.458*** -1.684*** -1.018*** -2.487***

class1 2.928*** 0.0975 0.363** 0.556*** 0.0765

class2 3.104*** -0.0488 0.290 0.164* -0.0362

kids -22.28*** -1.816*** -1.241*** -0.708*** -0.103

smoker 8.495*** 0.107 -0.0877 -1.049*** -0.603***

_Iyear_1999 6.148*** -0.261 -0.0682 -0.290*** -0.598***

_Iyear_2004 30.95*** -0.976*** -7.122*** 0.982*** 0.217

Constant -24.22*** 3.892*** 5.778*** 1.480*** 9.711***

Observations 22369 22369 22369 22369 22369

R-squared 0.294 0.128 0.201 0.133 0.051

Standard errors not shown *** p<0.01, ** p<0.05, * p<0.1

Conclusion and Future Plan

• Steady increase in spending at the top of the food pyramid i.e. foods high in fat and sugar plus alcohol.

• The relationship between household expenditure and household characteristics is important in explaining the allocation of household expenditure to consumer goods

• Price information not contained in the HBS will be obtained prior to estimation of the AIDS model.

• Non linear version of SUR will also be estimated

• AIDS (linear) or QAIDS (non-linear) model will be used to estimate the demand elasticities.