Estimating Short and Long Run Income Elasticities of Foods and Nutrients for Rural South India

This paper estimates expenditure–income elasticities of six categories of foods using the Institute for Crops Research in Semi-Arid Tropics panel data on households from rural south India. The results underscore the importance of distinguishing between the short and long run effects particularly for groups like milk and meat. The demand for intake of nutrients is next analysed using two time observations on individuals under three formulations. A simple dynamic demand system is specified for five nutrient groups which is then extended to incorporate the differences in quality of foods consumed by expressing the intake of nutrients as ratios to energy intake by the individuals. Lastly, an interdependent formulation is estimated under special assumptions on the pattern of correlation between the individual effects and the remaining nutrients. The limited length of the panel data raises some issues of identification in the third case that are also resolved. Overall, these data provide support for the view that increases in household incomes will in turn improve the intakes of nutrients.