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Food Prices and Consumer Demand: Differences across Income Levels and Ethnic Groups

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  • Cliona Ni Mhurchu
  • Helen Eyles
  • Chris Schilling
  • Qing Yang
  • William Kaye-Blake
  • Murat Genç
  • Tony Blakely

Abstract

Background: Targeted food pricing policies may improve population diets. To assess their effects on inequalities, it is important to determine responsiveness to price changes across income levels and ethnic groups. Objective: Our goal was to estimate price elasticity (PE) values for major commonly consumed food groups in New Zealand, by income and ethnicity. PE values represent percentage change in demand associated with 1% change in price of that good (own-PE) or another good (cross-PE). Design: We used food expenditure data from national household economic surveys in 2007/08 and 2009/10 and Food Price Index data from 2007 and 2010. Adopting an Almost Ideal Demand System approach, own-PE and cross-PE estimates were derived for 24 food categories, household income quintiles, and two ethnic groups (Māori and non-Māori). Results: Own-PE estimates (with two exceptions) ranged from −0.44 to −1.78. Cross-PE estimates were generally small; only 31% of absolute values were greater than 0.10. Excluding the outlier ‘energy drinks’, nine of 23 food groups had significantly stronger own-PEs for the lowest versus highest income quintiles (average regression-based difference across food groups −0.30 (95% CI −0.62 to 0.02)). Six own-PEs were significantly stronger among Māori; the average difference for Māori: non-Māori across food groups was −0.26 (95% CI −0.52 to 0.00). Conclusions: Food pricing policies have potential to improve population diets. The greater sensitivity of low-income households and Māori to price changes suggests the beneficial effects of such policies on health would be greatest for these groups.

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  • Cliona Ni Mhurchu & Helen Eyles & Chris Schilling & Qing Yang & William Kaye-Blake & Murat Genç & Tony Blakely, 2013. "Food Prices and Consumer Demand: Differences across Income Levels and Ethnic Groups," PLOS ONE, Public Library of Science, vol. 8(10), pages 1-12, October.
  • Handle: RePEc:plo:pone00:0075934
    DOI: 10.1371/journal.pone.0075934
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    3. Penne, Tess & Goedemé, Tim, 2021. "Can low-income households afford a healthy diet? Insufficient income as a driver of food insecurity in Europe," Food Policy, Elsevier, vol. 99(C).
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    6. Amanda Lee & Meron Lewis, 2018. "Testing the Price of Healthy and Current Diets in Remote Aboriginal Communities to Improve Food Security: Development of the Aboriginal and Torres Strait Islander Healthy Diets ASAP (Australian Standa," IJERPH, MDPI, vol. 15(12), pages 1-15, December.
    7. Roosen, Jutta & Staudigel, Matthias & Rahbauer, Sebastian, 2022. "Demand elasticities for fresh meat and welfare effects of meat taxes in Germany," Food Policy, Elsevier, vol. 106(C).
    8. Annika J. Thies & Matthias Staudigel & Daniela Weible, 2023. "A segmentation of fresh meat shoppers based on revealed preferences," Agribusiness, John Wiley & Sons, Ltd., vol. 39(4), pages 1075-1099, October.
    9. Joey Blumberg & Gary Thompson, 2022. "Nonparametric segmentation methods: Applications of unsupervised machine learning and revealed preference," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(3), pages 976-998, May.
    10. Cliona Ni Mhurchu & Helen Eyles & Murat Genc & Peter Scarborough & Mike Rayner & Anja Mizdrak & Kelechi Nnoaham & Tony Blakely, 2015. "Effects of Health-Related Food Taxes and Subsidies on Mortality from Diet-Related Disease in New Zealand: An Econometric-Epidemiologic Modelling Study," PLOS ONE, Public Library of Science, vol. 10(7), pages 1-17, July.
    11. Liana Jacobi & Nhung Nghiem & Andrés Ramírez‐Hassan & Tony Blakely, 2021. "Food Price Elasticities for Policy Interventions: Estimates from a Virtual Supermarket Experiment in a Multistage Demand Analysis with (Expert) Prior Information," The Economic Record, The Economic Society of Australia, vol. 97(319), pages 457-490, December.
    12. Thomas, Alastair, 2019. "Who Would Win from a Multi-rate GST in New Zealand: Evidence from a QUAIDS Model," Working Paper Series 20932, Victoria University of Wellington, Chair in Public Finance.
    13. Christine Cleghorn & Ingrid Mulder & Alex Macmillan & Anja Mizdrak & Jonathan Drew & Nhung Nghiem & Tony Blakely & Cliona Ni Mhurchu, 2022. "Can a Greenhouse Gas Emissions Tax on Food also Be Healthy and Equitable? A Systemised Review and Modelling Study from Aotearoa New Zealand," IJERPH, MDPI, vol. 19(8), pages 1-15, April.
    14. Liu, Siyuan & Ohinmaa, Arto & Maximova, Katerina & Veugelers, Paul J., 2023. "The health and economic benefits of sugar taxation and vegetables and fruit subsidy scenarios in Canada," Social Science & Medicine, Elsevier, vol. 329(C).

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