Aggregation, Flexible Forms, and Estimation of Food Consumption Parameters

Abstract

Grouping schemes, commodity aggregation, and the choice of functional specification significantly influence the results of empirical demand studies. This article assesses the importance of these factors for estimating aggregate food consumption parameters. A flexible food demand model that nests alternative specifications is estimated using U.S. data. Foods are aggregated based on a new grouping scheme adopted from the “Dietary Guidelines for Americans.” Nutrient intake elasticities with respect to food prices and expenditure are calculated. The influence of socioeconomic variables on consumption and nutrient intake is analyzed. Price, income, and demographic effects are found to be highly significant. Our findings are invariant to the choice of functional form.