Households' Choices Among Fluid Milk Products: What Happens When Income and Prices Change?

Households have several ways to economize on their purchases at retail food stores when prices increase or their incomes fall. This report investigates a household’s choice among retail fluid milk products categorized along three dimensions: three levels of fat content, two levels of package size, and organic versus conventional methods of production. Nielsen Homescan data from 2007-08 are used to estimate a choice model, which accounts for price, income, and other choice determinants. Results show that small changes in prices and income have a modest impact on a household’s choice among milk products. However, households mitigate the impact of more substantial price and income shocks by switching from more expensive to less expensive products. We also find that the demand for organic milk is more sensitive to swings in income and food prices than is demand for conventional milk.

Issue Date:
Apr 01 2013
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Economic Research Report Number 146

 Record created 2017-08-21, last modified 2018-01-23

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