Changing Dairy Consumption in an Emerging Economy: An Application of a Multivariate Two-part Model

This article examines the choices of Polish households in their decision to consume and the amount spent on four dairy products, i.e., whole milk, skim milk, butter and yogurt. A random utility framework leads to the specification of a system of four participation and four level (expenditure) equations. With the strong substitution effect between the consumption of whole milk and low-fat milk and possible correlation among the purchase decisions of other dairy products, the specification allows for correlation between the consumption decisions among different dairy products. Therefore, the selection of a system approach leads to constructing a multivariate two-part model. A pooled cross-sectional sample used in model estimation has 77,043 observations with non-missing values for the period from 2005 to 2008.

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Conference Paper/ Presentation
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JEL Codes:
D12; Q13
Paper #9229

 Record created 2017-04-01, last modified 2020-10-28

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