IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v14y2022i13p8156-d855498.html
   My bibliography  Save this article

Determinants of Food Expenditure Patterns: Evidence from U.S. Consumers in the Context of the COVID-19 Price Shocks

Author

Listed:
  • Clement O. Codjia

    (Department of Agricultural Economics, University of Kentucky, Lexington, KY 40546, USA)

  • Sayed H. Saghaian

    (Department of Agricultural Economics, University of Kentucky, Lexington, KY 40546, USA)

Abstract

This study examined the factors that determine U.S. household expenditure patterns for food products in the context of exceptional price shocks due to the COVID-19 pandemic. This research relied on the Consumer Expenditure Diary Survey (CEX) for the year 2020, where households or consumer units represent units of observation. With a sample size of 10,453 observations, the empirical estimation of the Heckman two-step model yields interesting results. Consistent with the inelastic nature of food products, we found conditional expenditure elasticities of income were less than one for all kinds of food, including food away from home (FAFH). The results showed both food and FAFH to be highly price elastic in this special period of higher food prices. For instance, a 1% increase in own price implied a 7.78% decrease in the probability to spend on food and a 20.93% decrease in propensity to purchase FAFH. This study provides business managers and marketing experts with insights on the consumer profile and food product price strategy.

Suggested Citation

  • Clement O. Codjia & Sayed H. Saghaian, 2022. "Determinants of Food Expenditure Patterns: Evidence from U.S. Consumers in the Context of the COVID-19 Price Shocks," Sustainability, MDPI, vol. 14(13), pages 1-17, July.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:13:p:8156-:d:855498
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/14/13/8156/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/14/13/8156/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Marianne P. Bitler & Hilary W. Hoynes & Diane Whitmore Schanzenbach, 2020. "The Social Safety Net in the Wake of COVID-19," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 51(2 (Summer), pages 119-158.
    2. J. Scott Shonkwiler & Steven T. Yen, 1999. "Two-Step Estimation of a Censored System of Equations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 972-982.
    3. Brenna Ellison & Brandon McFadden & Bradley J. Rickard & Norbert L. W. Wilson, 2021. "Examining Food Purchase Behavior and Food Values During the COVID‐19 Pandemic," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(1), pages 58-72, March.
    4. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    5. Saksena, Michelle J. & Okrent, Abigail M. & Anekwe, Tobenna D. & Cho, Clare & Dicken, Christopher & Effland, Anne & Elitzak, Howard & Guthrie, Joanne & Hamrick, Karen S. & Hyman, Jeffrey & Jo, Young &, 2018. "America’s Eating Habits:Food Away From Home," Economic Information Bulletin 281119, United States Department of Agriculture, Economic Research Service.
    6. Sinha, Subhra & Laha, Arindam, 2019. "Food Price Shocks and the Changing Pattern of Consumption Expenditure across Decile Classes in Rural and Urban India: A Difference-in-Difference Analysis," Studies in Agricultural Economics, Research Institute for Agricultural Economics, vol. 121(3), December.
    7. Alberto Alesina & Eliana La Ferrara, 2003. "Ethnic Diversity and Economic Performance," Harvard Institute of Economic Research Working Papers 2028, Harvard - Institute of Economic Research.
    8. Ogundari, Kolawole & Arifalo, Sadiat Funmilayo, 2013. "Determinants of Household Demand for Fresh Fruit and Vegetable in Nigeria: A Double Hurdle Approach," Quarterly Journal of International Agriculture, Humboldt-Universitaat zu Berlin, vol. 52(3), pages 1-18, August.
    9. Peter C. Reiss & Matthew W. White, 2008. "What changes energy consumption? Prices and public pressures," RAND Journal of Economics, RAND Corporation, vol. 39(3), pages 636-663, September.
    10. Cheng, 'Chris' Guo & Capps, Oral Jr. & Dharmasena, Senarath, 2021. "Demand analysis of peanuts and tree nuts in the United States: a micro-perspective," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 24(3), February.
    11. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-844, September.
    12. Steven T. Yen & Andrew M. Jones, 1996. "Individual cigarette consumption and addiction: A flexible limited dependent variable approach," Health Economics, John Wiley & Sons, Ltd., vol. 5(2), pages 105-117, March.
    13. Bozoglu, Mehmet & Bilgic, Abdulbaki & Yen, Steven T. & Huang, Chung L., 2013. "Household food expenditures at home and away from home in Turkey," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149737, Agricultural and Applied Economics Association.
    14. Liu, Haiyan & Wahl, Thomas I. & Seale, James L., Jr. & Bai, Junfei, 2012. "Household Composition and Food Away From Home Expenditures in Urban China," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 131057, Agricultural and Applied Economics Association.
    15. Zeballos, Eliana & Sinclair, Wilson & Park, Timothy, 2021. "Understanding the Components of U.S. Food Expenditures During Recessionary and Non-Recessionary Periods," Economic Research Report 327182, United States Department of Agriculture, Economic Research Service.
    16. Amoakon, Joel & Ejimakor, Godfrey & Hardy, Deric, 2016. "Exploring the Food Expenditure Patterns of College Students," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 230666, Southern Agricultural Economics Association.
    17. Lauren Chenarides & Carola Grebitus & Jayson L. Lusk & Iryna Printezis, 2021. "Food consumption behavior during the COVID‐19 pandemic," Agribusiness, John Wiley & Sons, Ltd., vol. 37(1), pages 44-81, January.
    18. Kalle Hirvonen & Alan de Brauw & Gashaw T. Abate, 2021. "Food Consumption and Food Security during the COVID‐19 Pandemic in Addis Ababa," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(3), pages 772-789, May.
    19. Hung‐Hao Chang & Chad D. Meyerhoefer, 2021. "COVID‐19 and the Demand for Online Food Shopping Services: Empirical Evidence from Taiwan," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(2), pages 448-465, March.
    20. OGUNMODEDE, Adewale Moses & OMONONA, Bolarin Titus, 2020. "Food As Medicine: Food Consumption Patterns And Reported Illnesses Among Households," Review of Agricultural and Applied Economics (RAAE), Faculty of Economics and Management, Slovak Agricultural University in Nitra, vol. 23(2), October.
    21. Jill E. Hobbs, 2020. "Food supply chains during the COVID‐19 pandemic," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 68(2), pages 171-176, June.
    22. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, January.
    Full references (including those not matched with items on IDEAS)

    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. Núñez-Sánchez, Ramón & Otoya-Chavarría, Marco & Soberón, Alexandra, 2024. "Price and budget elasticities under utility poverty policies in Spain," Utilities Policy, Elsevier, vol. 88(C).
    2. Lanfranco, Bruno A. & Ames, Glenn C.W. & Huang, Chung L., 2001. "Comparisons Of Hispanic Households' Demand For Meat With Other Ethnic Groups," Faculty Series 16710, University of Georgia, Department of Agricultural and Applied Economics.
    3. Huidan Xue & Yujia Zhai & Wen-Hao Su & Ziling He, 2023. "Governance and Actions for Resilient Urban Food Systems in the Era of COVID-19: Lessons and Challenges in China," Agriculture, MDPI, vol. 13(9), pages 1-25, August.
    4. Rozana Himaz, 2010. "Intrahousehold Allocation of Education Expenditure: The Case of Sri Lanka," Economic Development and Cultural Change, University of Chicago Press, vol. 58(2), pages 231-258, January.
    5. Yen, Steven T., 2003. "Estimating Demand For Cigarettes And Alcohol With Zero Observations:," 2003 Annual meeting, July 27-30, Montreal, Canada 22168, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Yajia Liang & Taiyang Zhong & Jonathan Crush, 2022. "Boon or Bane? Urban Food Security and Online Food Purchasing during the COVID-19 Epidemic in Nanjing, China," Land, MDPI, vol. 11(6), pages 1-25, June.
    7. Beznoska, Martin, 2019. "Do couples pool their income? Evidence from demand system estimation for Germany," Discussion Papers 2019/3, Free University Berlin, School of Business & Economics.
    8. Egemen İPEK, 2019. "An Empirical Study on Alcohol Participation and Consumption Decision in Turkey," Sosyoekonomi Journal, Sosyoekonomi Society, issue 27(41).
    9. Svetlana Fedoseeva & Ellen Van Droogenbroeck, 2023. "Pandemic pricing: Evidence from German grocery e‐commerce," Agribusiness, John Wiley & Sons, Ltd., vol. 39(4), pages 1139-1156, October.
    10. Renner, Sebastian & Lay, Jann & Schleicher, Michael, 2017. "The Effects of Energy Price Changes: Heterogeneous Welfare Impacts, Energy Poverty, and CO2 Emissions in Indonesia," GIGA Working Papers 302, GIGA German Institute of Global and Area Studies.
    11. Martina Vecchi & Edward C. Jaenicke & Claudia Schmidt, 2022. "Local food in times of crisis: The impact of COVID‐19 and two reinforcing primes," Agribusiness, John Wiley & Sons, Ltd., vol. 38(4), pages 850-873, October.
    12. Lanfranco, Bruno A. & Ames, Glenn C.W. & Huang, Chung L., 2002. "Comparisons Of Hispanic Households' Demand For Meats With Other Ethnic Groups," Journal of Food Distribution Research, Food Distribution Research Society, vol. 33(1), pages 1-10, March.
    13. Xiaonan Liu & Jeffrey T. LaFrance & Hayley H. Chouinard & Thomas L. Marsh, 2013. "A Generalized Utility Model with Binding Non-Negativity Constraints: Demand for Beer," 2013 Papers pli830, Job Market Papers.
    14. Christopher Ugochukwu Nwafor & Abiodun A. Ogundeji & Carlu van der Westhuizen, 2020. "Adoption of ICT-Based Information Sources and Market Participation among Smallholder Livestock Farmers in South Africa," Agriculture, MDPI, vol. 10(2), pages 1-13, February.
    15. Lanfranco, Bruno A. & Ames, Glenn C.W. & Huang, Chung L., 2001. "A Censored System Estimation Of Hispanic Household Food Consumption Patterns," Faculty Series 16720, University of Georgia, Department of Agricultural and Applied Economics.
    16. Ogundari, Kolawole & Arifalo, Sadiat Funmilayo, 2013. "Determinants of Household Demand for Fresh Fruit and Vegetable in Nigeria: A Double Hurdle Approach," Quarterly Journal of International Agriculture, Humboldt-Universitaat zu Berlin, vol. 52(3), pages 1-18, August.
    17. Renner, Sebastian & Lay, Jann & Greve, Hannes, 2018. "Household welfare and CO2 emission impacts of energy and carbon taxes in Mexico," Energy Economics, Elsevier, vol. 72(C), pages 222-235.
    18. David Aristei & Luca Pieroni, 2009. "Addiction, social interactions and gender differences in cigarette consumption," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 36(3), pages 245-272, August.
    19. Carson, Richard T. & Louviere, Jordan J., 2014. "Statistical properties of consideration sets," Journal of choice modelling, Elsevier, vol. 13(C), pages 37-48.
    20. Yu, Lingling & Hailu, Getu, 2010. "Household Demand for Convenience Chicken Meat Products in Canada," Consumer and Market Demand Network Papers 310299, University of Alberta, Department of Resource Economics and Environmental Sociology.

    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:gam:jsusta:v:14:y:2022:i:13:p:8156-:d:855498. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.