James S. Eales

The inverse almost ideal demand system

A new demand system, related to the Almost Ideal Demand System (AIDS) of Deaton and Muellbauer, is developed and illustrated. This Inverse AIDS (IAIDS) retains all of the desirable theoretical properties of the AIDS model with the exception of, consistent aggregation. An empirical issue is whether a linear approximation will work as well for the IAIDS as it has for the AIDS model, since quantities are not as highly correlated as prices. An application to US meat demand demonstrates that the linear approximation of the IAIDS is excellent, which enhances the ease and range of application. (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.)

An Examination of Fishing Location Choice in the Pink Shrimp Fishery

This article analyzes fishing location choices made by pink shrimp (Pandalus jordani) fishermen fishing off the coast of northern California. Data were gathered for 17 commercial vessels making 3000 net sets over a season. A simple multiplechoice logit model was used to examine whether recent information on success in various regions aids in explaining location choice. Results suggest that fishermen do account for economic factors in a manner consistent with economic theories of choice.

Simultaneity and Structural Change in U.S. Meat Demand

An inverse of the Almost Ideal Demand System, the IAIDS, is developed in order to test the endogeneity of prices and quantities in the U.S. meat demand system. The IAIDS has all the desirable theoretical properties of the AIDS except aggregation from the micro to the market level. Using annual data, both prices and quantities appear to be endogenous within the entire meat market. Including livestock production costs and technical change indicators as instruments eliminates evidence of a mid 1970s demand change.

Generalized Models of Japanese Demand for Fish

Given a relative lack of knowledge about Japanese consumer preferences for fish, Japanese fish demand is modeled using both Marshallian (ordinary) and inverse demand systems, each of which nests a number of competing specifications. Results indicate that the inverse demand systems dominate the ordinary demand systems in forecasting performance and in nonnested tests. The inverse system suggests that Japanese fish prices are less responsive to changes in consumption than found in previous studies. Copyright 1997, Oxford University Press.

PROJECTING WORLD FOOD DEMAND USING ALTERNATIVE DEMAND SYSTEMS

Computable General Equilibrium (CGE) models are increasingly being used to project world food markets in order to support forward-looking policy analysis. Such projections hinge critically on the underlying functional form for representing consumer demand. Simple functional forms can lead to unrealistic projections by failing to capture changes in income elasticities of demand. We adopt as our benchmark the recently introduced AIDADS demand system and compare it with several alternative demand systems currently in widespread use in CGE models. This comparison is conducted in the context of projections for disaggregated global food demand using a global CGE model. We find that AIDADS represents a substantial improvement, particularly for the rapidly growing developing countries. For these economies, the most widely used demand systems tend to over-predict future food demands, and hence overestimate future production and import requirements for agricultural products.

Changes in the Structure of Global Food Demand

May 1998 Purdue AGEC Staff Paper #98-5 A newly developed demand system is used to estimate the response of food and food product demand to per capita expenditure changes. The resulting Engel elasticities are then used to project food and food product demand in 2020 assuming per capita expenditure and population changes. Results suggest that while food expenditure is projected to grow, it accounts for a smaller proportion of total expenditure. Further analysis indicates change in the composition of food demand away from a grain and towards livestock is projected to occur in lower income countries in 2020.

Estimating consumer demands across the development spectrum: maximum likelihood estimates of an implicit direct additivity model

Abstract This paper characterizes consumer demand patterns across the development spectrum using elasticity estimates from a demand system possessing non-linear Engel effects. Demands for six broadly defined goods are then projected under the assumption that per capita expenditure growth rates differ across the development spectrum. Such projections illustrate the extent to which non-linear income effects generate more plausible demand responses. Estimated marginal budget shares for food decline in a logistical manner and range from about 0.5 for Ethiopia to less than 0.05 for the USA. Engel elasticities for food range from 0.95 for Ethiopia to less than 0.1 for the USA.

Food and Consumer Economics

Agricultural economists first carried out demand studies in order to understand determinants of farm prices and incomes. The shift to a focus on consumer welfare began with studies of the role of food and food assistance in standards of living. Now the profession is more concerned with how information and quality attributes influence consumer behavior. Agricultural economists’ empirical work in this field has informed the development of household production theory, hedonic price theory, definitions of poverty thresholds, complete demand systems, and survey and experimental techniques to elicit preferences.

Destination Image as Quantified Media Messages: The Effect of News on Tourism Demand

This study proposes to quantify media messages about a tourist destination in the form of time series and then use these series as variables representing a qualitative factor of destination image in models of tourism demand. Quantified media messages, or Dynamic Destination Image Index series, are obtained applying content analysis methodology to media materials that reflect news volume, topics raised about the destination, and favorability of coverage. The methodology of quantifying media messages is demonstrated using articles about Russia published in three influential U.K. newspapers—the Times, the Guardian, and the Independent. To test whether media messages account for variance not captured by traditional econometric variables, the series were used in models of total and leisure U.K. arrivals to Russia for the period of 1993-2007. Four DDII-Russia news series were found to be significant factors in consumer destination choice.

On the estimation of 'an implicitly additive demand system'

Motivated by a lack of Engel flexibility in commonly used demand systems, Rimmer and Powell developed a new demand system. This system, referred to AIDADS, is implicitly, directly additive, possesses marginal budget shares and thus Engel elasticities, that vary nonlinearly with expenditure such that predicted budget shares are restricted to the [0,1] interval. Due to these attractive Engel properties, AIDADS represents a significant contribution to the literature on demand analysis. This paper presents an alternative estimation procedure to the one used by Rimmer and Powell and examines its properties via a case study. The proposed approach avoids a linear approximation employed in Rimmer and Powells estimation framework. Based on a small Monte Carlo study, it appears that the approach produces more accurate estimates of the parameters and Engel elasticities.