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Abstract
The calorie-income demand elasticity is an important parameter in the
development literature and in the policy arena. Yet, there is very little evidence on the
extent to which it can be considered as an unchanging parameter or a time-shifting
parameter that, for example, changes with the economic conditions faced by households.
In this paper I use data from the 1996 and 1999 National Socio-Economic
Surveys (SUSENAS) in Indonesia to examine whether the relationship between income
changes and caloric availability has changed and if so, how. Using the same
questionnaire, the SUSENAS surveys collect detailed information on more than 200
different food items consumed over the last seven days by 60,000 households at the same
point in each survey year. I use nonparametric as well as regression methods to examine
two important relationships: (1) between income and total calories, and (2) between
income and calories from cereals and other foods (excluding cereals and root crops).
The empirical analysis finds that the income elasticity of the demand for total
calories is slightly higher in February 1999 (the crisis year with dramatically different
relative prices) compared to its level in February 1996. Also, the calorie-income elasticity
for cereals as a group increases while the calorie-income elasticity for other food items
decreases. The latter finding is interpreted as consistent with the presence of a binding
subsistence constraint.