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Engel’S Law, Diet Diversity Andthe Quality Of Food Consumption

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  • Kenneth W Clements

    (Business School, University of Western Australia)

  • Jiawei Si

    (Business School, University of Western Australia)

Abstract

Increasing income brings about a decline in the relative importance of food consumption, a wider spread of spending patterns and a demand for higher-quality goods. Using an index-number approach, this paper analyses these three closely related tendencies. Stripping out the impact of prices from the dispersion of food expenditures gives a volume-based measure of diet diversity that is relevant for nutrition. Using unpublished ICP data for 28 items of food in more than 100 countries, we find that the income elasticity of diet diversity ranges from 0.2 (for the poorest) to 0.5 (for the richest countries). The quality of the food consumption basket, measured by an income elasticity-consumption covariance, increases with income, but the elasticity is small. Approximately three-quarters of spending on higher quality food is on account of larger volumes, with the remainder going into prices. As the prices of luxuries relative to necessities tend to be higher in richer countries, the structure of prices has a progressive impact on the global distribution of real incomes.

Suggested Citation

  • Kenneth W Clements & Jiawei Si, 2015. "Engel’S Law, Diet Diversity Andthe Quality Of Food Consumption," Economics Discussion / Working Papers 15-25, The University of Western Australia, Department of Economics.
    • Handle: RePEc:uwa:wpaper:15-25
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    Cited by:

    1. Chai, Andreas & Stepanova, Elena & Moneta, Alessio, 2023. "Quantifying expenditure hierarchies and the expansion of global consumption diversity," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 860-886.
    2. Kurdi, Sikandra, 2021. "The nutritional benefits of cash transfers in humanitarian crises: evidence from Yemen," World Development, Elsevier, vol. 148(C).
    3. Shojaeddini, Ensieh & Schreiber, Andrew & Wolverton, Ann & Marten, Alex, 2024. "Consumer demand and the economy-wide costs of regulation: Modeling households with empirically estimated flexible functional forms," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
    4. Selvanathan, Saroja & Selvanathan, E.A. & Jayasinghe, Maneka, 2021. "A new approach to analyse conditional demand: An application to Australian energy consumption," Energy Economics, Elsevier, vol. 93(C).
    5. Rathnayaka, Shashika D. & Selvanathan, Eliyathamby A. & Selvanathan, Saroja, 2022. "Modelling the consumption patterns in the Asian countries," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 277-296.
    6. Tripathi, Amarnath & Sardar, Sucheta & Shyam, Hari Shankar, 2023. "Hybrid crops, income, and food security of smallholder families: Empirical evidence from poor states of India," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    7. George Verikios & Kevin Hanslow & Marc Jim Mariano, 2021. "Understanding the Australian economy: a computable general equilibrium model with updated data and parameters," Economics Discussion / Working Papers 21-14, The University of Western Australia, Department of Economics.
    8. Harris-Fry, Helen & Saville, Naomi M. & Paudel, Puskar & Manandhar, Dharma S. & Cortina-Borja, Mario & Skordis, Jolene, 2022. "Relative power: Explaining the effects of food and cash transfers on allocative behaviour in rural Nepalese households," Journal of Development Economics, Elsevier, vol. 154(C).
    9. Clements, Kenneth & Mariano, Marc Jim & Verikios, George, 2022. "Expenditure patterns, heterogeneity, and long-term structural change," Economic Modelling, Elsevier, vol. 113(C).
    10. Kenneth W Clements & Yihui Lan & Haiyan Liu & Long Vo, 2022. "The Icp, Ppp And Household Expenditure Patterns," Economics Discussion / Working Papers 22-18, The University of Western Australia, Department of Economics.

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