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Research article - Peer-reviewed, 2023

The dynamics of strategically important food preference in Indonesia: An empirical evaluation of consumption pattern and welfare loss

Hamzah, Ibnu Nuhr; Huang, Wei

Abstract

This study evaluated regional heterogeneity in food consumption patterns across Indone-sia. The demand system for strategically important food commodities was estimated for five regions: Sumatera, Java-Bali, Kalimantan, Sulawesi, and Nusa Tenggara-Maluku -Papua (Nusmapua). A two-step budgeting procedure based on the Quadratic Almost Ideal Demand System (QUAIDS) framework was used to estimate the unconditional elasticities of each food item in each regional setting, together with household data from the 2018 national socio-economic survey by Statistics Indonesia. The results showed that elasticities differ significantly across the regions, suggesting that regional heterogeneity needs to be considered when estimating demand structure. The estimated elasticities were used to conduct a welfare impact analysis of a simulated price increase, which showed that disregarding regional heterogeneity can overstate or understate welfare loss caused by price increases.& COPY; 2023 Economic Society of Australia, Queensland. Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).

Keywords

QUAIDS; Strategic food; Demand elasticity; Regional heterogeneity; Indonesia

Published in

Economic Analysis and Policy
2023, Volume: 79, pages: 435-449

    Sustainable Development Goals

    SDG2 Zero hunger

    UKÄ Subject classification

    Economics

    Publication identifier

    DOI: https://doi.org/10.1016/j.eap.2023.06.024

    Permanent link to this page (URI)

    https://res.slu.se/id/publ/122630