IDEAS home Printed from https://ideas.repec.org/a/bla/jageco/v61y2010i1p76-96.html
   My bibliography  Save this article

Preference Heterogeneity and Habit Persistence: The Case of Breakfast Cereal Consumption

Author

Listed:
  • Linda Thunström

Abstract

The efficiency of information, price campaigns and economic incentive policies related to food depend on the degree of habit persistence in food consumption. This paper estimates the strength of state dependence associated with breakfast cereal consumption and its heterogeneity across households, where positive state dependence implies habit persistence and negative state dependence implies variety seeking in consumption. The analysis uses a detailed micro‐level dataset from the research institute GfK Sweden on household breakfast cereal consumption in 2003. The analysis relies on a mixed multinomial logit model and finds breakfast cereal consumption is generally highly habitual. The degree of habit persistence, however, exhibits heterogeneity across households. In addition, some households can be characterised as variety seeking. The strength of habit persistence is similar across income and educational groups. The strength of habit persistence seems to be weaker for households with several adults and children compared with one‐adult households.

Suggested Citation

  • Linda Thunström, 2010. "Preference Heterogeneity and Habit Persistence: The Case of Breakfast Cereal Consumption," Journal of Agricultural Economics, Wiley Blackwell, vol. 61(1), pages 76-96, February.
    • Handle: RePEc:bla:jageco:v:61:y:2010:i:1:p:76-96
    DOI: 10.1111/j.1477-9552.2009.00228.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1477-9552.2009.00228.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1477-9552.2009.00228.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Alessie, Rob & Kapteyn, Arie, 1991. "Habit Formation, Interdependent References and Demographic Effects in the Almost Ideal Demand System," Economic Journal, Royal Economic Society, vol. 101(406), pages 404-419, May.
    2. Nevo, Aviv, 2001. "Measuring Market Power in the Ready-to-Eat Cereal Industry," Econometrica, Econometric Society, vol. 69(2), pages 307-342, March.
    3. Raquel Carrasco & José M. Labeaga & J. David López-Salido, 2005. "Consumption and Habits: Evidence from Panel Data," Economic Journal, Royal Economic Society, vol. 115(500), pages 144-165, January.
    4. Meghir, Costas & Weber, Guglielmo, 1996. "Intertemporal Nonseparability or Borrowing Restrictions? A Disaggregate Analysis Using a U.S. Consumption Panel," Econometrica, Econometric Society, vol. 64(5), pages 1151-1181, September.
    5. Timothy J. Richards & Paul M. Patterson & Abebayehu Tegene, 2007. "Obesity And Nutrient Consumption: A Rational Addiction?," Contemporary Economic Policy, Western Economic Association International, vol. 25(3), pages 309-324, July.
    6. M. Dolores Collado & Martin Browning, 2007. "Habits and heterogeneity in demands: a panel data analysis," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(3), pages 625-640.
    7. Chidmi, Benaissa & Lopez, Rigoberto A., 2007. "AJAE Appendix: Brand-Supermarket Demand for Breakfast Cereals and Retail Competition," American Journal of Agricultural Economics APPENDICES, Agricultural and Applied Economics Association, vol. 89(2), pages 1-5, May.
    8. Tülin Erdem, 1996. "A Dynamic Analysis of Market Structure Based on Panel Data," Marketing Science, INFORMS, vol. 15(4), pages 359-378.
    9. Kenkel, Donald S. & Manning, Willard, 1999. "Economic evaluation of nutrition policy: Or, there's no such thing as a free lunch," Food Policy, Elsevier, vol. 24(2-3), pages 145-162, May.
    10. Naik, Narayan Y & Moore, Michael J, 1996. "Habit Formation and Intertemporal Substitution in Individual Food Consumption," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 321-328, May.
    11. Kenneth Train ., 2000. "Halton Sequences for Mixed Logit," Economics Working Papers E00-278, University of California at Berkeley.
    12. Daniel McFadden & Kenneth Train, 2000. "Mixed MNL models for discrete response," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(5), pages 447-470.
    13. David Hensher & William Greene, 2003. "The Mixed Logit model: The state of practice," Transportation, Springer, vol. 30(2), pages 133-176, May.
    14. Rosen, Sherwin, 2007. "Studies in Labor Markets," National Bureau of Economic Research Books, University of Chicago Press, number 9780226726304, September.
    15. repec:ucp:bknber:9780226726281 is not listed on IDEAS
    16. Kyrre Rickertsen, 1998. "The demand for food and beverages in Norway," Agricultural Economics, International Association of Agricultural Economists, vol. 18(1), pages 89-100, January.
    17. David Revelt & Kenneth Train, 1998. "Mixed Logit With Repeated Choices: Households' Choices Of Appliance Efficiency Level," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 647-657, November.
    18. Blanciforti, Laura & Green, Richard, 1983. "An Almost Ideal Demand System Incorporating Habits: An Analysis of Expenditures on Food and Aggregate Commodity Groups," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 511-515, August.
    19. Karen E. Dynan, 2000. "Habit Formation in Consumer Preferences: Evidence from Panel Data," American Economic Review, American Economic Association, vol. 90(3), pages 391-406, June.
    20. P. B. Seetharaman, 2004. "Modeling Multiple Sources of State Dependence in Random Utility Models: A Distributed Lag Approach," Marketing Science, INFORMS, vol. 23(2), pages 263-271, April.
    21. Pollak, Robert A, 1970. "Habit Formation and Dynamic Demand Functions," Journal of Political Economy, University of Chicago Press, vol. 78(4), pages 745-763, Part I Ju.
    22. Carlos Arnade & Munisamy Gopinath & Daniel Pick, 2008. "Brand Inertia in U.S. Household Cheese Consumption," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(3), pages 813-826.
    23. Pashardes, Panos, 1986. "Myopic and Forward Looking Behavior in a Dynamic Demand System," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(2), pages 387-397, June.
    24. James J. Heckman, 1981. "Heterogeneity and State Dependence," NBER Chapters, in: Studies in Labor Markets, pages 91-140, National Bureau of Economic Research, Inc.
    25. Benaissa Chidmi & Rigoberto A. Lopez, 2007. "Brand-Supermarket Demand for Breakfast Cereals and Retail Competition," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(2), pages 324-337.
    26. Pradeep K. Chintagunta, 1993. "Investigating Purchase Incidence, Brand Choice and Purchase Quantity Decisions of Households," Marketing Science, INFORMS, vol. 12(2), pages 184-208.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gilbert, Ben & Graff Zivin, Joshua S., 2020. "Dynamic corrective taxes with time-varying salience," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Thunström, Linda, 2008. "Food Consumption, Paternalism and Economic Policy," Umeå Economic Studies 739, Umeå University, Department of Economics.
    2. Békési, Dániel & Loy, Jens-Peter & Weiss, Christoph, 2013. "State Dependence and Preference Heterogeneity: The Hand of the Past on Breakfast Cereal Consumption," 87th Annual Conference, April 8-10, 2013, Warwick University, Coventry, UK 158699, Agricultural Economics Society.
    3. Jacobs Martin, 2016. "Accounting for Changing Tastes: Approaches to Explaining Unstable Individual Preferences," Review of Economics, De Gruyter, vol. 67(2), pages 121-183, August.
    4. Niemi, Janne, 2018. "Short-run and long-run food import elasticities with persistent trading habits," Working Papers 111, VATT Institute for Economic Research.
    5. Yi, DongGyu, 2014. "Three studies on environmental valuation," ISU General Staff Papers 201401010800005065, Iowa State University, Department of Economics.
    6. Burney, Shaheer, 2018. "In-kind benefits and household behavior: The impact of SNAP on food-away-from-home consumption," Food Policy, Elsevier, vol. 75(C), pages 134-146.
    7. Francisco Alvarez-Cuadrado & Jose Maria Casado & Jose Maria Labeaga, 2016. "Envy and Habits: Panel Data Estimates of Interdependent Preferences," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 78(4), pages 443-469, August.
    8. Mark D. Agee, 2020. "Classroom management, persistent bullying, and teacher practices in a discrete choice model of habit formation," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 4(1), pages 5-16, December.
    9. Natalia, Khorunzhina & Wayne Roy, Gayle, 2011. "Heterogenous intertemporal elasticity of substitution and relative risk aversion: estimation of optimal consumption choice with habit formation and measurement errors," MPRA Paper 34329, University Library of Munich, Germany.
    10. Chen Zhen & Michael K. Wohlgenant, 2006. "Meat Demand under Rational Habit Persistence," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 54(4), pages 477-495, December.
    11. Emmerling, Johannes & Qari, Salmai, 2017. "Car ownership and hedonic adaptation," Journal of Economic Psychology, Elsevier, vol. 61(C), pages 29-38.
    12. Jing Li & Edward C. Jaenicke & Tobenna D. Anekwe & Alessandro Bonanno, 2018. "Demand for ready‐to‐eat cereals with household‐level censored purchase data and nutrition label information: A distance metric approach," Agribusiness, John Wiley & Sons, Ltd., vol. 34(4), pages 687-713, October.
    13. Rossi, Mariacristina, 2005. "Households’ Consumption under the Habit Formation Hypothesis. Evidence from Italian Households using the Survey of Household Income and Wealth (SHIW)," Economics Discussion Papers 8886, University of Essex, Department of Economics.
    14. Rob Alessie & Federica Teppa, 2010. "Saving and habit formation: evidence from Dutch panel data," Empirical Economics, Springer, vol. 38(2), pages 385-407, April.
    15. Liu, Xuan & Yang, Fang & Cai, Zongwu, 2016. "Does relative risk aversion vary with wealth? Evidence from households׳ portfolio choice data," Journal of Economic Dynamics and Control, Elsevier, vol. 69(C), pages 229-248.
    16. Marco A. Palma & Dmitry V. Vedenov & David Bessler, 2020. "The order of variables, simulation noise, and accuracy of mixed logit estimates," Empirical Economics, Springer, vol. 58(5), pages 2049-2083, May.
    17. Kragt, Marit Ellen, 2013. "Comparing models of unobserved heterogeneity in environmental choice experiments," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152198, Australian Agricultural and Resource Economics Society.
    18. IWAMOTO Koichiro, 2011. "Food Consumption Expenditure and Habit Formation: Evidence from Japanese Household Panel Data," ESRI Discussion paper series 264, Economic and Social Research Institute (ESRI).
    19. Ugo Colombino & Marilena Locatelli, 2008. "Parameters Heterogeneity in a Model of Labour Supply: Exploring the Performance of Mixed Logit," CHILD Working Papers wp21_08, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
    20. Marshall Freimer & Dan Horsky, 2008. "Try It, You Will Like It—Does Consumer Learning Lead to Competitive Price Promotions?," Marketing Science, INFORMS, vol. 27(5), pages 796-810, 09-10.

    More about this item

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jageco:v:61:y:2010:i:1:p:76-96. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0021-857X .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.