Lusk 2016
Lusk 2016
Lusk 2016
Applied Economic Perspectives and Policy (2016) volume 0, number 0, pp. 1– 39.
doi:10.1093/aepp/ppv050
Submitted Article
How Meat Demand Elasticities Vary with Price,
Income, and Product Category
Jayson L. Lusk* and Glynn T. Tonsor
Jayson L. Lusk is Regents Professor and Willard Sparks Endowed Chair in the
Department of Agricultural Economics at Oklahoma State University and Glynn
Abstract As US beef and pork prices approached record high levels in 2014, indus-
try analysts expressed surprised at consumer response. Because the relative price
swings have occurred only recently, traditional approaches to demand analysis that
rely on historical data series may be less useful than is typically the case. Employing
one of the largest and longest-running choice experiments, we analyze data on
110,295 choices made by 12,255 consumers observed over a year-long time period co-
inciding with historically high meat prices. Our findings reveal nonlinear demands
for meat products, with demand being more inelastic at higher prices. Ground beef,
steak, and pork chop demands are more sensitive to changes in chicken breast price
than the reverse. Moreover, cross-price elasticities between disaggregate meat pro-
ducts shrink as prices rise. Consumers’ incomes significantly affect demand inter-
relationships. Higher income consumers are more likely to choose steak and chicken
breasts and are less likely to choose ground beef, chicken wings, and deli ham than are
lower income consumers. High-income consumers tend to be less responsive to own-
price changes and more responsive to cross-price changes than lower income consu-
mers. This analysis provides estimates of structural demand parameters that help
explain current meat expenditure patterns, and the results have implications for the
assumption of linearity often invoked in policy analyses.
Key words: beef, chicken, choice experiment, heterogeneous consumers,
meat demand, mixed logit, nonlinear elasticities, pork.
JEL Classification codes: C83, D12, Q11, Q18.
# The Author 2016. Published by Oxford University Press on behalf of the Agricultural and Applied
Economics Association. All rights reserved. For permissions, please e-mail:
journals.permissions@oup.com
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Applied Economic Perspectives and Policy
Figure 1 Change in retail prices for six meat products from January 2010 to January 2015
2
Meat Demand Elasticities Vary with Price, Income, and Product Category
1
Possible drawbacks of choice experiments include the possibility for hypothetical bias, particularly in the
propensity to choose the “none” option, framing effects resulting from the need to specify particular
options and attribute levels and display them in a particular format, and selection effects that might arise
if the survey sample doesn’t match the population of interest. Overviews of the method and discussions of
advantages and disadvantages of choice experiments can be found in Louviere, Hensher, and Swait
(2000), Holmes and Adamowicz (2003), and Carlsson (2011).
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Applied Economic Perspectives and Policy
Methods
The data utilized in this study come from the Food Demand Survey (FooDS)
project that began in May 2013. FooDS tracks consumer preferences, food
expenditures, price expectations, and awareness and concern for a variety of
food issues. FooDS is an on-line survey with a sample size of at least 1,000 indi-
viduals each month. The survey is delivered on the 10th of the month unless
that date falls on a weekend, in which case it is moved to the next closest
Monday. The requisite sample size is typically acquired within three days. The
4
Meat Demand Elasticities Vary with Price, Income, and Product Category
data collected do not constitute a panel because a new sample is drawn each
month; however, precisely the same questions are posed each month. The
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Applied Economic Perspectives and Policy
included two nonmeat products in the choice experiment to allow for shifts
out of meat to not be necessarily forced into the no-purchase option as this
more accurately reflects grocery store experiences.
Rather than presenting respondents with choices involving all possible
price combinations that could exist, we selected a subset of choices
(or a fractional factorial design) such that the prices of each choice alterna-
tive were uncorrelated with each other alternative (i.e., there is no multicolli-
nearity). This so-called main effects orthogonal fractional factorial design
(see Louviere, Hensher, and Swait 2000; Lusk and Norwood 2005) required
27 choices. The 27 choices were blocked into three sets of nine, and each
person was randomly assigned to one of the three blocks. The design is able
Econometric Methods
We analyze the choice data through the lenses of a random utility model
(McFadden 1973). In particular, consumer i derives the following utility
from choice option j: Uij = Vij + 1ij . If the 1ij follow a Type I extreme value
distribution and are independently and identically distributed across i and
j, then the conventional multinomial logit model (MNL) results:
eVij
Prob(i chooses j) = 9 . (1)
k=1 eVik
Vij = bj + a pj , (2)
2
We chose to vary the difference in prices for each alternative by an equal amount ($1.50) which could
have produced a different result than varying prices by equal percentage amounts. We varied the prices
using the same levels (not same percentages) because in the discrete choices models we consider, choices
are driven by the differences in levels of attributes (not proportional differences). See Hanley et al. (2005)
for evidence that choice of price levels has no influence on resulting implications.
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Meat Demand Elasticities Vary with Price, Income, and Product Category
8
Vij = bj + a jt pt + dj p2j . (4)
t=1
Despite its flexibility and ease of estimation, the mother logit may yield esti-
mates that are inconsistent with utility maximization, and it results in a prolif-
eration of parameters (in our case 56 more parameters than equation [3]).
As a result, we also consider an error-component model (ECM) (DeJong
et al. 2003; Scarpa, Ferrini, and Willis 2005), which has the advantage of
relaxing IIA in a more parsimonious manner while explicitly modeling the
panel nature of the data (i.e., each person answered nine choice questions,
and it is assumed that their preferences are correlated over the choices). In
general, the ECM can be written as:
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Applied Economic Perspectives and Policy
analyst to make judgment calls about how the error components enter the
utility functions, which may not properly reflect consumers’ preferences.
The final specification we consider is the mixed logit model, also known
as the random parameter logit (RPL). The most general form of the RPL we
consider is:
8
Vij = bj + v jt dit + aj pj + dj p2j , (6)
t=1
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Meat Demand Elasticities Vary with Price, Income, and Product Category
Results
For the MNL, mother logit, ECM, and RPL models, likelihood ratio tests
strongly reject the assumption of constant marginal utility in favor of includ-
ing quadratic effects. Likelihood ratio tests also reject the assumption of
alternative-independent price effects in favor of alternative-specific price
effects. Thus, no matter the model specification (MNL, mother logit, ECM, or
RPL), the data support nonlinear price effects that vary with the type of
product. Across specifications, the AIC suggests that the preferred specifica-
tion is the RPL model with quadratic price effects and correlated alternative-
specific constants. Moreover, within the RPL specification, likelihood ratio
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Table 1 Estimates of Random Parameter Models by Income
Variables Pooled Low income <$40,000 Middle income $40,000 to $99,999 High income >$100,000
Steak (SK) 21.394* (0.158) 21.534* (0.283) 21.555* (0.236) 20.958* (0.332)
Pork chop (PC) 21.271* (0.090) 21.203* (0.150) 21.324* (0.135) 21.165* (0.197)
Deli ham (DH) 21.115* (0.068) 21.256* (0.109) 21.062* (0.104) 21.049* (0.169)
Chicken breast (CB) 22.021* (0.054) 22.172* (0.090) 22.039* (0.080) 21.683* (0.122)
Chicken wing (CW) 21.131* (0.068) 21.073* (0.105) 21.256* (0.106) 20.994* (0.166)
Rice and beans (RB) 20.907* (0.048) 20.960* (0.076) 20.865* (0.073) 20.916* (0.118)
Pasta (PA) 21.894* (0.113) 22.008* (0.185) 21.894* (0.171) 21.640* (0.258)
Quadratic Price Effects
Ground beef (GB) 0.094* (0.001) 0.098* (0.017) 0.107* (0.016) 0.050* (0.025)
Steak (SK) 0.069* (0.012) 0.084* (0.022) 0.079* (0.018) 0.034 (0.026)
Pork chop (PC) 0.083* (0.012) 0.071* (0.021) 0.088* (0.019) 0.079* (0.027)
Deli ham (DH) 0.098* (0.013) 0.112* (0.022) 0.086* (0.021) 0.108* (0.033)
Chicken breast (CB) 0.177* (0.008) 0.196* (0.014) 0.180* (0.013) 0.133* (0.019)
Chicken wing (CW) 0.086* (0.017) 0.054* (0.027) 0.121* (0.027) 0.075 (0.042)
Rice and beans (RB) 0.089* (0.012) 0.092* (0.020) 0.082* (0.019) 0.105* (0.030)
Pasta (PA) 0.177* (0.014) 0.192* (0.024) 0.178* (0.022) 0.144* (0.033)
Meat Demand Elasticities Vary with Price, Income, and Product Category
11
Variables Pooled Low income <$40,000 Middle income $40,000 to $99,999 High income >$100,000
a
One asterisk represents statistical significance at the 0.01 level or lower.
b
Numbers in parentheses are standard errors.
Note: Market shares estimated using mid-points of prices employed in the experimental design; shares for
each income category are calculated by averaging over 25,000 draws from the respective estimated
parameter distributions.
a
Aggregate market share is the weighted average share across income category (the sample has 38% low
income, 43.5% middle income, and 18.5% high income).
lower-priced products such as ground beef, chicken wings, and rice and
beans than are richer consumers, suggesting these products are inferior
goods. Although there is nothing in the model that would require such an
outcome, the market share of middle-income consumers falls between that of
low and high income for every alternative (except pasta). This finding,
coupled with the results of the likelihood ratio test, suggests income is an
important and predictable driver of meat preferences.
Also of interest in table 2 is the result that low-income consumers are
more likely to choose the “no purchase” alternative than are higher income
consumers. This finding suggests some caution in utilizing conditional
demand systems (which simply re-allocate a fixed level of expenditure
among products in the assumed separability set when prices rise) to
compare consumption patterns of richer and poorer consumers. This result
is also interesting in light of rising prices and amidst the recent recession.
Specifically, the lower-income segment is likely representing a declining
share of total consumption for meat products. Given our finding of different
elasticities by income segment, this is important for understanding the
current, aggregate meat demand landscape.
Figure 3 utilizes the estimates in table 1 to construct demand curves for
four meat products for each income category over the range of prices used
in the experimental design. The first thing to note about the demand curve
for each product and income class is that they are convex (as implied by the
positive quadratic effects in table 1). This implies that demand becomes
more inelastic as prices rise. Price changes in the upper-end of the price dis-
tribution do not change the quantity demanded as much as price changes in
the lower-end of the price distribution. This phenomenon helps explain the
surprise expressed by some analysts at the lack of reduction in beef and
pork expenditures despite higher prices.
For some products, like pork chops, there are not marked differences in
the demand curves for low-, middle-, and high-income consumers (except
at high price levels). For other products like steak, income changes result in
large shifts in demand. In all cases, but perhaps most easily seen for ground
beef, the demand curves for high-income consumers are more inelastic than
that for low-income consumers.
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Downloaded from http://aepp.oxfordjournals.org/ at University of Nebraska-Lincoln Libraries on May 31, 2016
14
Figure 4 Change in demand for steak and chicken breast as prices of other meats change,
middle-income consumers
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the median level used in the experimental design (which is $3.50 for ground
beef ), there is not much difference in the implied market shares across the
competing models. However, as prices increase or decrease, the bias grows.
The models assuming linear price effects under-state the quantity
demanded (or market share) at both low and high prices. It is important to
note that even the specifications that assume linear price effects still imply
demand curves with some degree of curvature because of the nonlinear
form of the logit formula in equation (1). Not only does the assumption of
constant marginal price effects yield biased estimates of the slope of the
demand curve, as figure 5 also shows, the assumption also has implications
for understanding cross-price demand responses. In particular, when the
price of chicken breast falls, the RPL model with uncorrelated random para-
meters suggests a more dampened demand shift than actually results.
Allowing random parameter correlation yields a more accurate depiction of
the cross-price demand response, but the lack of curvature in the price
effects yields biased estimates—this time at the midpoint of the price for
ground beef rather than at the extremes.
The own- and cross-price demand responses can be more systematically
investigated by investigating elasticities. Because of the nonlinear nature of
the demand curves, table 3 reports elasticities implied by a price increase,
and table 4 reports elasticities implied by a price decrease. The reported
elasticities are arc elasticities calculated by determining how a constant per-
centage price increase for each product changes the estimated market share
(determined via equation [1]), starting from the mid-points of the prices for
each product utilized in the experimental design (the appendix provides
more detail on how elasticities are calculated and shows qualitatively
similar results associated with a constant dollar increase for each product).
Before discussing the results, we note that it is a bit of a challenge to dir-
ectly compare our elasticities with those present in the extant literature
because prior analyses typically provide elasticities aggregated over all cuts
within a species and over all markets. We have product-level demands
observed from a choice question format that places people in a single, store
market environment (where demand is likely to be more elastic). That said,
16
Table 3 Arc Elasticities for a Price Increase by Income
Change in Price
Change in Quantity GB SK PC DH CB CW RB PA
Low income
Ground beef (GB) 21.959 0.184 0.224 0.141 0.544 0.152 0.071 0.075
Steak (SK) 0.375 21.738 0.269 0.097 0.425 0.141 0.065 0.091
Pork chop (PC) 0.470 0.277 21.927 0.157 0.566 0.151 0.078 0.076
Deli ham (DH) 0.421 0.141 0.225 21.306 0.422 0.194 0.103 0.064
Chicken breast (CB) 0.339 0.131 0.169 0.089 21.503 0.145 0.075 0.064
Chicken wing (CW) 0.276 0.126 0.132 0.119 0.419 20.939 0.099 0.054
Rice and beans (RB) 0.211 0.096 0.111 0.103 0.355 0.162 20.744 0.152
Pasta (PA) 0.310 0.188 0.151 0.089 0.425 0.123 0.212 21.252
Meat Demand Elasticities Vary with Price, Income, and Product Category
17
Change in Price
Change in Quantity GB SK PC DH CB CW RB PA
High Income
Ground beef (GB) 21.703 0.459 0.185 0.094 0.580 0.090 0.051 0.053
Steak (SK) 0.253 21.674 0.187 0.041 0.378 0.066 0.028 0.052
18
Pork chop (PC) 0.271 0.496 21.524 0.097 0.599 0.086 0.036 0.045
Deli ham (DH) 0.342 0.265 0.242 20.940 0.479 0.128 0.086 0.050
Chicken breast (CB) 0.207 0.244 0.147 0.048 21.151 0.063 0.047 0.058
Chicken wing (CW) 0.203 0.268 0.133 0.080 0.392 20.869 0.101 0.144
Rice and beans (RB) 0.157 0.152 0.076 0.072 0.401 0.137 20.632 0.191
Pasta (PA) 0.148 0.262 0.087 0.039 0.454 0.180 0.176 21.327
No purchase 0.163 0.132 0.122 0.028 0.339 0.050 0.063 0.082
Note: Arc elasticities are calculated by determining the proportionate change in market shares resulting from a 10% increase in the price of each respective food divided by 0.1; shares for each
income category are calculated by averaging over 25,000 draws from the respective estimated parameter distributions.
Change in Price
Change in Quantity GB SK PC DH CB CW RB PA
Low income
Ground beef (GB) 22.511 0.280 0.292 0.173 0.681 0.167 0.081 0.119
Steak (SK) 0.478 22.652 0.347 0.120 0.546 0.155 0.075 0.145
Pork chop (PC) 0.587 0.408 22.526 0.192 0.705 0.166 0.088 0.121
Deli ham (DH) 0.530 0.217 0.292 21.614 0.542 0.211 0.116 0.102
Chicken breast (CB) 0.435 0.202 0.223 0.111 21.916 0.159 0.085 0.103
Chicken wing (CW) 0.358 0.195 0.175 0.146 0.537 21.031 0.112 0.087
Rice and beans (RB) 0.278 0.149 0.148 0.128 0.460 0.177 20.839 0.238
Pasta (PA) 0.398 0.282 0.199 0.111 0.544 0.136 0.234 21.995
Meat Demand Elasticities Vary with Price, Income, and Product Category
19
Change in Price
Change in Quantity GB SK PC DH CB CW RB PA
High income
Ground beef (GB) 22.075 0.548 0.236 0.114 0.673 0.100 0.059 0.078
Steak (SK) 0.307 22.061 0.238 0.051 0.455 0.074 0.033 0.076
20
Pork chop (PC) 0.328 0.588 21.947 0.118 0.693 0.095 0.042 0.067
Deli ham (DH) 0.406 0.332 0.303 21.157 0.568 0.141 0.098 0.074
Chicken breast (CB) 0.254 0.307 0.188 0.059 21.360 0.070 0.055 0.085
Chicken wing (CW) 0.249 0.333 0.171 0.098 0.471 20.967 0.115 0.207
Rice and beans (RB) 0.194 0.196 0.100 0.089 0.479 0.151 20.724 0.272
Pasta (PA) 0.184 0.325 0.114 0.049 0.535 0.196 0.198 21.931
No purchase 0.200 0.171 0.157 0.035 0.409 0.057 0.072 0.119
Note: Arc elasticities are calculated by determining the proportionate change in market shares resulting from a 10% decrease in the price of each respective food divided by 20.1; shares for each
income category are calculated by averaging over 25,000 draws from the respective estimated parameter distributions.
the estimates in table 3 are not outside the realm of that reported in prior
literature. For example, the own-price elasticities of demand for steak we
estimate are between 21.67 and 21.84, depending on income class, which
can be compared with the estimate of 21.88 in Taylor and Tonsor (2013)
obtained using scanner data.
We find ground beef demand is more elastic than steak, which is consistent
with the findings of Brester and Wohlgenant (1991) and Coffey, Schroeder,
and Marsh (2011) but opposite of that found by Capps (1989), Nayga and
Capps (1994), and Taylor and Tonsor (2013). Table 3 indicates pork chop
demand to be more elastic than ham. This is consistent with the findings of
Capps (1989) and Coffey, Schroeder, and Marsh (2011) but differs from the
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22
Meat Demand Elasticities Vary with Price, Income, and Product Category
Funding
The project was partially supported by the Oklahoma Agricultural Experiment
Station, the Willard Sparks Endowment at Oklahoma State, and the Agricultural
and Food Research Initiative Competitive Program of the USDA National Institute
of Food and Agriculture (NIFA), grant number 2015-67023-23134.
References
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Applied Economic Perspectives and Policy
Brester, G. W., and T. C. Schroeder. 1995. The Impacts of Brand and Generic
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Experiments: An Empirical Test. Resource and Energy Economics 27 (3): 227–34.
Holmes, T. P., and W. L. Adamowicz. 2003. Attribute-Based Methods. In A Primer on
Nonmarket Valuation, ed. P. A. Champ, K. J. Boyle, and T. C. Brown, 171–219.
Dordrecht: Kluwer.
Ishmael, W. 2014. Why Is Beef Demand Growing as Per-Capita Income Shrinks?
BEEF Editor’s Blog. January 27, 2014. Available at: http://beefmagazine.com/
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Kastens, T., and G. Brester. 1996. Model Selection and Forecasting Ability of Theory-
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Meat Demand Elasticities Vary with Price, Income, and Product Category
Appendix
Calculating Market Shares and Elasticities
Most of the results are based off the RPL with correlated random para-
meters. The deterministic portion of the utility function is given the esti-
mated parameters (indicated by the ^) is:
8
V̂ij = b̂j + v̂ jt dit + âj pj + d̂j p2j , (A1)
t=1
where Sij is the probability of purchase (or market share) for individual i
and food option j and d i is a vector containing the terms dit . Equation (A2)
cannot be directly evaluated because it contains the random terms dit which
are each distributed according to a standard Normal distribution. Following
Train (2009), the mean share can be approximated through simulation. In
particular, for a set of N draws for dit , the unconditional share can be
written as:
1 N
eV̂ ij
Sj = 9 V̂ . (A3)
N i=1 k=1 e ik
S′j − S
j 1
g jk = j 0.1 . (A4)
S
27
Applied Economic Perspectives and Policy
a
Education attainment statistics are for individuals 18 years and older; for 25 years and older census data
indicate, 39% have a HS degree or less, 31% have some college, and 30% have a BS degree or higher.
Table A3 Bureau of Labor Statistics (BLS) Retail Prices for Products Associated with Products
used in the Choice Experiment (2013 average)
28
Table A4 Main Effects Orthogonal Design Used in Choice Experiment Survey
Ground Steak Pork Chop Deli Ham Chicken Chicken Rice and Beans
Question Beef (GB) (SK) (PC) (DH) Breast (CB) Wing (CW) (RB) Pasta (PA) Block
Meat Demand Elasticities Vary with Price, Income, and Product Category
29
k=1
7 Error component model with linear price effects Uij = bj + aj pj + eij + 1ij a
8 Error component model with quadratic price effects Uij = bj + aj pj + dj p2j + eij + 1ij a
9 RPL with linear price effects, uncorrelated alternative-specific constants Uij = (bj + sj dij ) + aj pj + 1ij , dij N(0, 1)
10 RPL with linear price effects, correlated alternative-specific constants 8
Uij = bj + v jk dik + aj pj + 1ij , dik N(0, 1)b
k=1
11 RPL with quadratic price effects, correlated alternative-specific constants 8
Uij = bj + v jk dik + aj pj + dj p2j + 1ij , dik N(0, 1)b
k=1
a
Our specification included 7 mean-zero Normally distributed error components that we parsimoniously summarize in this equation with a single term, eij . In particular, over-lapping error
components were included for: (1) all food products vs. the “none” alternative, (2) all meat products vs. non meat, (3) beef products, (4) pork products, (5) chicken products, (6) higher value meat
products (steak, pork chop, chicken breast), and (7) lower value meat products (ground beef, deli ham, chicken wing).
b
The terms, v jk , are the elements of the lower-triangle of the Cholesky decomposition associated with the covariance matrix of the random parameters.
Table A6 Eleven Competing Models Fit to Choice Data (N¼110,295 choices made by
12,255 people)
#
Model Description Parms LLF AIC
31
Applied Economic Perspectives and Policy
Pooled Model
GB| 1.00000 .89604 .94934 .94986 .90205 .84265 .73259 .82490
SK| .89604 1.00000 .78181 .87644 .81557 .70713 .68577 .71424
PC| .94934 .78181 1.00000 .94812 .90936 .84320 .72387 .81291
DH| .94986 .87644 .94812 1.00000 .85318 .90208 .77086 .78847
CB| .90205 .81557 .90936 .85318 1.00000 .81537 .70825 .77927
CW| .84265 .70713 .84320 .90208 .81537 1.00000 .77554 .74024
RB| .73259 .68577 .72387 .77086 .70825 .77554 1.00000 .61305
PA| .82490 .71424 .81291 .78847 .77927 .74024 .61305 1.00000
32
Table A9 Arc Elasticities for a $1.50/lb Price Increase by Income
Change in Price
Change in Quantity GB SK PC DH CB CW RB PA
Low income
Ground beef (GB) 21.337 0.140 0.157 0.091 0.352 0.108 0.048 0.033
Steak (SK) 0.257 21.322 0.190 0.061 0.269 0.100 0.044 0.041
Pork chop (PC) 0.329 0.213 21.342 0.102 0.367 0.107 0.052 0.034
Deli ham (DH) 0.292 0.107 0.158 20.834 0.266 0.141 0.070 0.028
Chicken breast (CB) 0.231 0.099 0.118 0.057 20.957 0.102 0.050 0.028
Chicken wing (CW) 0.186 0.096 0.091 0.076 0.266 20.665 0.068 0.024
Rice and beans (RB) 0.140 0.072 0.077 0.066 0.222 0.116 20.508 0.068
Pasta (PA) 0.210 0.143 0.105 0.056 0.270 0.085 0.153 20.555
Meat Demand Elasticities Vary with Price, Income, and Product Category
33
Change in Price
Change in Quantity GB SK PC DH CB CW RB PA
Pork chop (PC) 0.200 0.442 21.085 0.061 0.445 0.058 0.023 0.026
Deli ham (DH) 0.258 0.230 0.175 20.583 0.346 0.089 0.055 0.028
34
Chicken breast (CB) 0.152 0.211 0.104 0.029 20.833 0.042 0.030 0.033
Chicken wing (CW) 0.148 0.233 0.094 0.050 0.279 20.594 0.065 0.084
Rice and beans (RB) 0.113 0.130 0.053 0.045 0.288 0.095 20.404 0.112
Pasta (PA) 0.106 0.228 0.061 0.024 0.329 0.128 0.117 20.767
No purchase 0.119 0.112 0.087 0.017 0.240 0.033 0.040 0.047
Note: Arc elasticities are calculated by determining the percentage change in market shares divided by the percentage change in prices, when moving from the midpoints to the high points of prices
employed in the experimental design; shares for each income category are calculated by averaging over 25,000 draws from the respective estimated parameter distributions.
Change in Price
Change in Quantity GB SK PC DH CB CW RB PA
Low income
Ground beef (GB) 23.673 0.369 0.438 0.284 0.931 0.231 0.125 0.228
Steak (SK) 0.685 23.526 0.507 0.209 0.802 0.217 0.117 0.271
Pork chop (PC) 0.796 0.521 23.870 0.309 0.952 0.231 0.135 0.231
Deli ham (DH) 0.737 0.291 0.435 22.722 0.798 0.278 0.171 0.201
Chicken breast (CB) 0.634 0.272 0.343 0.194 22.771 0.221 0.131 0.200
Chicken wing (CW) 0.542 0.262 0.277 0.245 0.786 21.431 0.165 0.173
Rice and beans (RB) 0.439 0.204 0.236 0.216 0.698 0.242 21.247 0.426
Pasta (PA) 0.589 0.370 0.311 0.193 0.792 0.196 0.310 23.791
Meat Demand Elasticities Vary with Price, Income, and Product Category
35
Change in Price
Change in Quantity GB SK PC DH CB CW RB PA
High income
Ground beef (GB) 22.850 0.609 0.342 0.185 0.822 0.151 0.095 0.139
Steak (SK) 0.416 22.353 0.343 0.089 0.610 0.116 0.055 0.133
Pork chop (PC) 0.443 0.651 22.854 0.191 0.840 0.145 0.070 0.120
Deli ham (DH) 0.526 0.385 0.424 21.928 0.729 0.204 0.147 0.134
36
Chicken breast (CB) 0.352 0.356 0.277 0.101 21.746 0.111 0.088 0.149
Chicken wing (CW) 0.346 0.383 0.254 0.161 0.626 21.456 0.175 0.340
Rice and beans (RB) 0.276 0.233 0.156 0.146 0.629 0.219 21.124 0.436
Pasta (PA) 0.265 0.374 0.176 0.085 0.685 0.268 0.276 23.289
No purchase 0.281 0.205 0.232 0.063 0.555 0.093 0.113 0.204
Note: Arc elasticities are calculated by determining the percentage change in market shares divided by the percentage change in prices, when moving from the mid-points to the low points of prices
employed in the experimental design; shares for each income category are calculated by averaging over 25,000 draws from the respective estimated parameter distributions.
RPL with Correlated ASCs RPL with Correlated RPL with Uncorrelated MNL with MNL with Linear
Variables and Quadratic Prices ASCs and Linear Prices ASCs and Linear Prices Quadratic Prices Prices
Meat Demand Elasticities Vary with Price, Income, and Product Category
37
Ground beef (GB) 21.512* (0.105) 20.800* (0.014) 20.829* (0.015) 21.277* (0.010) 20.718* (0.013)
Steak (SK) 21.555* (0.236) 20.550* (0.016) 20.549* (0.016) 21.037* (0.200) 20.392* (0.013)
Pork chop (PC) 21.324* (0.135) 20.698* (0.017) 20.715* (0.017) 21.133* (0.130) 20.638* (0.016)
Deli ham (DH) 21.062* (0.104) 20.647* (0.018) 20.665* (0.018) 20.934* (0.099) 20.597* (0.017)
Chicken breast (CB) 22.039* (0.080) 20.908* (0.012) 20.913* (0.012) 21.462* (0.069) 20.677* (0.010)
Chicken wing (CW) 21.256* (0.106) 20.799* (0.022) 20.818* (0.022) 20.915* (0.093) 20.636* (0.019)
Rice and beans (RB) 20.865* (0.073) 20.555* (0.017) 20.557* (0.017) 20.604* (0.063) 20.415* (0.014)
Pasta (PA) 21.894* (0.171) 20.515* (0.019) 20.513* (0.018) 21.592* (0.160) 20.452* (0.017)
Quadratic price effects
Ground beef (GB) 0.107* (0.016) 0 0 0.084* (0.015) 0
Steak (SK) 0.079* (0.018) 0 0 0.051* (0.016) 0
Pork chop (PC) 0.088* (0.019) 0 0 0.070* (0.018) 0
Deli ham (DH) 0.086* (0.021) 0 0 0.070* (0.020) 0
Chicken breast (CB) 0.180* (0.013) 0 0 0.126* (0.011) 0
Continued
RPL with Correlated ASCs RPL with Correlated RPL with Uncorrelated MNL with MNL with Linear
Variables and Quadratic Prices ASCs and Linear Prices ASCs and Linear Prices Quadratic Prices Prices
Meat Demand Elasticities Vary with Price, Income, and Product Category
39
N choices (people) 47952 (5328) 47952 (5328) 47952 (5328) 47952 (5328) 47952 (5328)
Log Likelihood 278669.7 278885.5 282049.7 290518.4 290661.1
a
One asterisk represents statistical significance at the 0.01 level or lower.
b
Numbers in parentheses are standard errors.