This article reports tests of aggregation over consumer food products and estimates of aggregate food demand elasticities. Evidence that food demand variables follow unit root processes leads us to build on and simplify existing tests of the Generalized Composite Commodity Theorem. We compute food demand elasticities using a method of cointegration that is shown to apply to a convenient but nonlinear functional form. Estimates are based on consumer reported expenditure data rather than commercial disappearance data. Copyright 2005, Oxford University Press.
Previous studies report that coupon redeemers have both greater income and more education than nonredeemers. One explanation for this association is the efficiency hypothesis. This hypothesis holds that higher income/education households are better shoppers, and thus better able to take advantage of the discounts coupons offer. An alternative explanation is the preference/opportunities hypothesis. This hypothesis holds that higher income/education households are more apt to purchase the higher priced brands that offer coupons, and are likely, therefore, to redeem more coupons. Panel data on household purchases of paper towels are used to evaluate these two hypotheses. Evidence in support of both is found.
The food expenditure equation of food stamp recipients is obtained as a generalization of Roy's identity. This equation rationalizes a larger marginal propensity to spend on food out of food stamps than out of income, and is an alternative to the traditional Southworth formulation. The only previously estimated functional form found to be flexible is due to Senauer and Young. Estimates of this specification using data from the San Diego Cash-Out Demonstration illustrates that flexibility is important. An example of welfare reform demonstrates that substantial errors can occur if flexibility is ignored.
Data from the Panel Survey of Income Dynamics (PSID) indicate that one‐fourth of the households eligible for the Food Stamp Program (FSP) do not know they are eligible. Using an FSP participation equation that incorporates a household's perceived FSP eligibility, it was estimated that informational outreach programs directed at these households have the potential of increasing the overall FSP participation rate by a maximum of 18% and benefit payments by 12.6%. These results can be useful in establishing realistic goals for FSP informational outreach programs.
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