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The Consumer Welfare Effects of Changing Expenditures on Food at Home and Food Away From Home

Author

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  • Islam, Didarul
  • Davis, George
  • Gupta, Anubhab
  • Okrent, Abigail

Abstract

This study finds that even though people spend a larger share of their food budget on food away from home (FAFH), it does not necessarily mean they gain higher welfare from FAFH relative to its budget. By investigating the impact of price changes of food at home (FAH) and FAFH on consumer welfare over time, we find that FAH price increases lead to more significant and volatile welfare losses compared to changes in FAFH prices, especially during economic crises like COVID-19. Using the Linear Approximate Almost Ideal Demand System (LA/AIDS) model within an aggregate demand system consisting of nine categories, we show that price changes in FAH and FAFH primarily affect their own categories, with minimal cross-category impacts. Despite the trend towards higher FAFH spending share, loss in total consumer welfare is more sensitive to FAH price change. The findings from our paper have implications for policymakers aiming to mitigate the adverse effects of price instability in various food categories.

Suggested Citation

  • Islam, Didarul & Davis, George & Gupta, Anubhab & Okrent, Abigail, 2024. "The Consumer Welfare Effects of Changing Expenditures on Food at Home and Food Away From Home," 2024 Annual Meeting, July 28-30, New Orleans, LA 344220, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea22:344220
    DOI: 10.22004/ag.econ.344220
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    Keywords

    Agribusiness; Agricultural Finance; Consumer/Household Economics;
    All these keywords.

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