Files
Abstract
In a 2003 report, International Evidence on Food Consumption Patterns, ERS economists
estimated income and price elasticities of demand for broad consumption categories
and food categories across 114 countries using 1996 International Comparison
Program (ICP) data. This report updates that analysis with an estimated two-stage
demand system across 144 countries using 2005 ICP data. Advances in ICP data collection since 1996 led to better results and more accurate income and price elasticity estimates. Low-income countries spend a greater portion of their budget on necessities, such as food, while richer countries spend a greater proportion of their income on luxuries, such as recreation. Low-value staples, such as cereals, account for a larger share of the
food budget in poorer countries, while high-value food items are a larger share of the
food budget in richer countries. Overall, low-income countries are more responsive to
changes in income and food prices and, therefore, make larger adjustments to their food consumption pattern when incomes and prices change. However, adjustments to price
and income changes are not uniform across all food categories. Staple food consumption
changes the least, while consumption of higher-value food items changes the most.