Have Milk Fat Preferences Shifted? Structural Analysis of New York Milk Consumption

Abstract

Consumption of lowfat and skim milk has increased substantially over the past decade. This study investigates whether the change is due to price and expenditure effects or to a more fundamental preference change in milk demand. Parametric and nonparametric analytical approaches provide a comprehensive analysis of structural change in milk consumption in New York State. A nonparametric approach first finds evidence of structural change. A parametric likelihood-ratio test then confirms the existence of structural change using a Kalman filter specification. The value of this technical analysis of milk preferences is its implication for labeling initiatives. Milk fat labels have allowed consumers to act on a new set of preferences, thereby improving consumer welfare.Food Consumption/Nutrition/Food Safety,