Estimating Consumer Preferences for Food, Using Time Series Data of Pakistan

Abid A. Burki

Abstract


Consumer preferences for food and non-food items in Pakistan
are frequently estimated by using data from the household surveys.
However, structural change in consumer preferences, caused by changes in
tastes, can be studied by using the annual time series data, a time
series of cross sections, or the panel data. This paper uses Pakistan’s
annual time series disappearance data for eight food commodities from
1972 to 1991 to study consumer behaviour. The existence and the nature
of structural change is tested by using both the generalised axiom of
revealed preference (GARP) and the first-difference LA/AIDS model. It
turns out that GARP tests are low-powered as tests of structural change
on our data-set. However, the results from the LA/AIDS model show a
shift in consumer demand from gram (split) to chicken after 1982. The
data set satisfies symmetry and homogeneity. The estimates of price and
income elasticities are also consistent with economic theory. The
implications of these results for policy are also discussed.

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DOI: https://doi.org/10.30541/v36i2pp.131-153

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