food demand, QUAIDS, Indonesia, Consumer/Household Economics, D11, D12,

Pangaribowo, Evita Hanie

English

Research Papers in Economics

Demand for Food of Indonesian Households:    
Evidence from Longitudinal Data 
 
 
 
 
Evita Hanie Pangaribowo 
 
 
Department of Economic and Technological Change 
Center for Development Research 
University of Bonn, Germany 
 
 
 
 
 
Poster prepared for presentation at the Agricultural and Applied Economics Association’s 
2011 AAEA & NAREA Joint Annual Meeting, Pittsburgh, Pennsylvania, July 24-26, 2011 
 
 
 
 
 
 
 
 
Copyright 2011 by Evita Hanie Pangaribowo. All rights reserved. Readers may make 
verbatim copies of this document for non-commercial purposes by any means, provided that 
this copyright notice appears on all such copies. 
 postersession.com
Conclusions
Demand for Food of Indonesian Households: Evidence from Longitudinal Data           
Evita Hanie Pangaribowo
Center for Development Research, University of Bonn, Germany
References
• The poorest households’
 
dominant expenditure is staple 
  food and the households are less likely to consume dairy 
  product.
• The richest group also spend some of their budget on 
  adult goods, yet their share of expenditure for better diet 
  such as vegetables, meat and fish and dairy products are 
  much larger than share of adult goods expenditure.
• Expenditure of snack and dried food formed the 
  dominant food expenditures for the richest households.
Banks, J., Blundell, R., and Lewbel, A., 1997. Quadratic 
  Engel Curves and Consumer Demand, The Review of 
  Economics and Statistics, 79(4): 527‐539.
Rusastra, I. W., Napitupulu, T. A., and Bourgeois, R., 2008. 
  The Impact of Support for Imports in Food Security in 
  Indonesia, Bogor: UNESCAP‐CAPSA.
• All 
 
food 
 
groups 
 
have 
 
positive 
 
expenditure 
 
elasticities 
  but 
 
the 
 
differing 
 
magnitude 
 
of 
 
those 
 
elasticities 
 
reflects 
  various food categories.
• Poorest 
 
households 
 
demonstrate 
 
the 
 
highest 
  expenditure elasticity on adult goods. 
• This 
 
finding 
 
explains 
 
the 
 
failure 
 
of 
 
government 
  intervention 
 
in 
 
the 
 
case 
 
of 
 
food 
 
security 
 
program
  meaning 
 
that 
 
poorest 
 
households 
 
spend 
 
their 
 
extra 
  resource to more ‘entertaining’
 
goods. 
• On 
 
the 
 
other 
 
hand, 
 
there 
 
is 
 
a 
 
potential 
 
to 
 
raise 
 
poor 
  households’
 
nutritional 
 
status 
 
since 
 
they 
 
are 
 
also 
  expenditure elastic on meat and fish and dairy products. 
• As 
 
expenditure 
 
elasticities 
 
for 
 
all 
 
food 
 
commodities 
  surpass 
 
the 
 
own 
 
price 
 
elasticities, 
 
policies 
 
which 
 
lead 
 
to 
  income generation might be more effective compared to 
  policies that affect price.
• In a developing country with wide income disparity and 
  rural‐urban 
 
gap 
 
like 
 
Indonesia, 
 
a 
 
comprehensive 
 
analysis 
  of 
 
food 
 
demand 
 
which 
 
account 
 
those 
 
differences 
 
is 
  essential 
 
to 
 
get 
 
a 
 
better 
 
understanding 
 
of 
 
household 
  demand 
 
behavior 
 
and 
 
to 
 
reshape 
 
the 
 
food 
 
policy 
  direction.  
Results Objectives
It 
 
is 
 
important 
 
for 
 
public 
 
policy 
 
to 
 
know 
 
how 
 
consumers 
 
change 
  their 
 
expenditure 
 
on 
 
goods 
 
in 
 
response 
 
to 
 
the 
 
changes 
 
of 
 
prices 
  and income. Hence, the objectives of this study are:
• to 
 
improve 
 
knowledge 
 
and 
 
understand 
 
the 
 
heterogeneous 
  pattern of food consumption behavior in Indonesia  
• to examine the food expenditure patterns across income groups 
  and regional differences.
Variables Pooled Poorest Richest Rural Urban
Household size  4.37 5.38 3.49 4.22 4.56
Education of HH Head 
  (years of schooling) 
6.34 3.73 10.12 4.86 8.04
Age of Household 
  Head 
51.12 51.38 51.33 51.09 51.15
Proportion of Male 
  Headed 
0.80 0.83 0.77 0.81 0.79
Proportion of Farm  0.40 0.56 0.20 0.62 0.15
Household 
Income 
 
per 
 
capita 
 
(in 
  ‘000 rupiah,  monthly)
295 70 1050 226 377
N 16966 1676 1676 9180 7786
Data and Method
• Three 
 
waves 
 
of 
 
Indonesian 
 
Family 
 
Life 
 
Survey 
 
Data 
 
(IFLS) 
 
1997, 
  2000 and 2007. 
• Eight 
 
food 
 
groups: 
 
staple, 
 
vegetables 
 
and 
 
fruit, 
 
meat 
 
and 
 
fish,
  oil, 
 
dairy 
 
products, 
 
adult 
 
goods, 
 
snack 
 
and 
 
dried 
 
food, 
 
and 
 
other 
  food (aggregated from 38 food items’
 
expenditure).
Pursuing 
 
food 
 
security 
 
is 
 
one 
 
of 
 
the 
 
most 
 
important 
 
Indonesian 
 
government’s 
 
agendas. 
 
Indonesian 
 
government 
 
has 
 
been 
 
successful 
 
in 
 
maintaining 
 
aggregate 
 
food 
 
production 
 
and 
 
supply, 
 
yet 
 
this 
 
achievement 
 
has 
 
not 
 
been 
 
transferred 
 
to 
 
household 
 
level. 
 
The 
  government has formulated several models of food security and established Food Security Council to mitigate the food insecurity (Rusastra et al. 2008). In addition, food security program has been provided since 1998. Nevertheless, poverty and food insecurity 
  remain. The failure might have to do with the inadequate information on household food expenditure patterns which vary across income groups and regions. Designing remedial policy measures, without the comprehensive understanding of the household demand 
  behavior, proved ineffective.  Hence, it is vital to gain a thorough knowledge of the factors underlying the consumption pattern
 
behavior for future food policy direction. 
Background
• Most 
 
food 
 
groups 
 
are 
 
found 
 
to 
 
be 
 
elastic 
 
except 
 
for 
  staple 
 
food, 
 
oils 
 
and 
 
other 
 
goods 
 
which 
 
are 
 
found 
 
to 
 
be 
  inelastic and thus necessities for the ‘all samples’. 
• Dairy 
 
products 
 
have 
 
the 
 
highest 
 
expenditure 
 
elasticity 
  followed by meat and fish. 
• Expenditure 
 
elasticity 
 
for 
 
staple 
 
food 
 
is 
 
elastic 
 
for 
 
the 
  poorest group. 
• Expenditure 
 
elasticity 
 
for 
 
adult 
 
goods 
 
of 
 
the 
 
poorest 
  households is the highest.
This 
 
study 
 
employs 
 
the 
 
Quadratic 
 
Almost 
 
Ideal 
 
Demand 
 
Systems 
  (Banks et al. 1997) with demographic effects added in the model.
wi
 
= αi
 
+ Σγlnpj
 
+ βi
 
ln{m/P(p)} + λi
 
/b(p)[ln{m/P(p)}]2
 
+ Σδis
 
Dst
 
+ uit
where, wi
 
is food budget share of eight commodities, p is a set of 
  prices, 
 
m 
 
is 
 
the 
 
total 
 
expenditure 
 
and 
 
D 
 
is 
 
a 
 
set 
 
of 
 
household 
  characteristics 
 
including 
 
household 
 
size, 
 
urban/rural, 
 
gender 
 
of
  household head, and level of education of household head. 
• Table 1 shows hug gap characteristics of poorest and richest 
  households.
• Poorest households tend to have larger household size, low 
  income per capita (less than 50 cents per day), and not complete
  primary school.
Table 1. Selected Household Characteristics
Figure 1. Food Budget Shares
Table 2. Expenditure Elasticities
Table 3. Marshallian Price Elasticities
All 
  Samples
Poorest Middle Richest Urban Rural
Staple  ‐0.7706
(0.0324)
‐0.9473
(0.1081)
‐0.7457
(0.0440)
‐0.8080
(0.1460)
‐0.6827
(0.0642)
‐0.8380
(0.0391)
Vege and Fruit ‐0.9580
(0.0160)
‐1.0703
(0.0654)
‐0.9848
(0.0266)
‐0.7772
(0.0488)
‐0.8483
(0.0228)
‐1.0297
(0.0231)
Meat and Fish ‐1.0032
(0.0331)
‐1.1402
(0.1510)
‐0.9741
(0.0553)
‐1.1228
(0.0979)
‐0.9202
(0.0496)
‐1.0532
(0.0454)
Dairy ‐0.9771
(0.0367)
‐1.2391
(0.1786)
‐0.8917
(0.0660)
‐1.0179
(0.0986)
‐0.9419
(0.0542)
‐0.9961
(0.0535)
Oils ‐0.7367
(0.0292)
‐0.7757
(0.0981)
‐0.7380
(0.0421)
‐0.6215
(0.1221)
‐0.7981
(0.0454)
‐0.6891
(0.0390)
Adult Goods ‐0.9451
(0.0438)
‐1.2450
(0.1868)
‐0.9617
(0.0696)
‐1.1954
(0.1439)
‐0.7940
(0.1268)
‐1.0255
(0.0526)
Snack‐Dried Food ‐0.9374
(0.0181)
‐0.7680
(0.0954)
‐0.9321
(0.0313)
‐0.9453
(0.0419)
‐0.9649
(0.0411)
‐0.9043
(0.0287)
Other  ‐0.9495
(0.0230)
‐0.7258
(0.0874)
‐0.9146
(0.0356)
‐0.8961
(0.0740)
‐0.9037
(0.0357)
‐0.9676
(0.0305)
All 
  Samples
Poorest Middle Richest Urban Rural
Staple  0.7564
(0.0083)
1.0152
(0.0424)
0.8798
(0.0201)
0.8623
(0.0356)
0.7866
(0.0135)
0.7566
(0.0104)
Vege and Fruit 1.0532
(0.0094)
0.9967
(0.0639)
0.9754
(0.0259)
0.8380
(0.0288)
1.0362
(0.0164)
1.0659
(0.0130)
Meat and Fish 1.1475
(0.0079)
1.0358
(0.0549)
1.1318
(0.0227)
1.0494
(0.0228)
1.0876
(0.0142)
1.1771
(0.0109)
Dairy 1.3025
(0.0140)
1.2800
(0.1240)
1.3793
(0.0453)
1.1246
(0.0377)
1.2017
(0.0779)
1.4078
(0.0208)
Oils 0.8879
(0.0115)
0.7960
(0.0712)
0.7484
(0.0296)
1.0744
(0.0511)
0.9292
(0.0220)
0.8625
(0.0151)
Adult Goods 1.0667
(0.0159)
1.3568
(0.1327)
1.2806
(0.0442)
0.9849
(0.0560)
1.0378
(0.1326)
1.1030
(0.0205)
Snack‐Dried Food 1.1586
(0.0125)
0.9091
(0.1021)
1.0203
(0.0373)
1.0876
(0.0311)
1.1163
(0.1015)
1.1097
(0.0177)
Other  0.9131
(0.0070)
0.9138
(0.0465)
0.8963
(0.0189)
1.0143
(0.0241)
0.9160
(0.0118)
0.9065
(0.0094)
• The magnitude of price elasticities between the poorest and the
 
richest 
  households do not vary significantly. 
• The 
 
poorest 
 
and 
 
the 
 
richest 
 
households 
 
are 
 
price 
 
elastic 
 
on 
 
meat 
 
and 
  fish, dairy products and adult goods.
Standard errors in parentheses
Standard errors in parentheses
• Male‐headed household has a negative and significant 
  impact on the consumption of vegetables, meat and fish, 
  dairy products and snack and dried food but it has a 
  positive and significant impact on adult goods 
  expenditures. 
• The education of household head has positive and 
  significant influence on vegetables, meat and fish, dairy 
  products, snack and dried and other food but  affects 
  staple and adult goods expenditures negatively.
Staple
Vege
Meat-Fish
Dairy Products
Oils
Adult Goods
Snacks
-.006 -.004 -.002 0 .002 .004
Parameter Estimate of HH Head Education
Figure 2. Effect of HH Head Education on Food 
  Expenditures
Acknowledgment:
Funding was provided by DAAD and Fiat Panis
 
Foundation. 

Demand for Food of Indonesian Households: Evidence from Longitudinal Data

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