Modeling Consumption with Limited Dependent Variables: Applications to Pork and Cheese

The double-hurdle and infrequency-of-purchase models are applied to pork and cheese consumption using the 1987-88 Nationwide Food Consumption Survey data. The models are generalized with the inverse hyperbolic sine transformation in the dependent variable, and this transformation results in a more flexible parameterization and error distribution than the untransformed models. Nonnested LR tests suggest that the IHS double-hurdle model provides better characterization of the data-generating process in household pork consumption than the IHS infrequency-of-purchase model but the elasticities derived from these models are similar. For household cheese consumption, the two models fit the data equally well. The IHS double-hurdle model and the IHS infrequency-of-purchase model generate very similar elasticities. Own-price effects on the probability and level of consumption are negative and significant for both pork and cheese, while income and cross-price effects are not significant. Household age composition, education, gender of meal planner, and race are among the demographic variables that affect consumption.

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Working or Discussion Paper
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CARD Staff Report 95-SR 76; Dietary Assessment Research Series Report 3

 Record created 2017-04-01, last modified 2018-01-22

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