Food Consumption in Pakistan: Application of Linear Approximate Almost Ideal Demand System

Irfan Ullah¹*, Abbas Ullah Jan¹, Syed Atta Ullah Shah¹, Muhammad Ishaq² and Ghaffar Ali¹

Received: June 01, 2018;   Published: June 20, 2018

DOI: 10.26717/BJSTR.2018.05.001265

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Abstract

This paper aims to examine the food consumption decisions of households in Pakistan to understand the demand for different food commodities and to determine the effects of important economic factors such as prices and income. Linear Almost Ideal Demand System model is applied to estimate food demand patterns using the Household Integrated Economic Survey of Pakistan for the year 2011-2012. Food products are categorized into fourteen groups including milk, vegetables, sugar, rice, fruits, beverages, wheat & wheat flour, other cereals, pulses, oil & fats, tea & coffee, backed products and other food. Economic factors such as food commodities price and household’s income and their socioeconomic and demographic characteristics are included in the model. Prices of basic food items such as wheat & wheat flour, baked products, milk, meat, fruits, vegetables, beverages, rice, other cereals, pulses, oils & fats, tea & coffee and baked product should be kept constant. Imposition of any sale tax could create huge loss in consumption for these commodities. The uncompensated own price elasticity of demand for milk, meat, fruits, rice, other cereals and backed products are more elastic to food expenditures and can be categorized as luxury goods. As the demand for milk, meat, fruits, rice, other cereals and backed products are more elastic to total food expenditures (income). Imposition of any income tax on household personnel income could reduce their consumption of these food groups. Such policies could result food security problems for low & middle income households in Pakistan.

Keywords: Demand System; LA/AIDS; Food Demand Elasticities; Expenditures Elasticities; Pakistan

Abbrevations: IFPRI: Index of International Food Policy Research Institute; FAO: Food and Agriculture Organization’s; LA/AIDS: Linear Approximate Almost Ideal Demand System; HIES: Household Integrated Economic Survey; PSB: Pakistan Bureau of Statistics; PSLM: Pakistan Social and Standard Living Measurement

Abstract| Introduction| Methodology| Data Collection on Required Variables| Results and Discussions| Conclusion and Recommendations| References|