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How Meat Demand Elasticities Vary with Price, Income, and Product Category

Jayson Lusk () and Glynn Tonsor ()

Applied Economic Perspectives and Policy, 2016, vol. 38, issue 4, 673-711

Abstract: As US beef and pork prices approached record high levels in 2014, industry analysts expressed surprised at consumer response. Because the relative price swings have occurred only recently, traditional approaches to demand analysis that rely on historical data series may be less useful than is typically the case. Employing one of the largest and longest-running choice experiments, we analyze data on 110,295 choices made by 12,255 consumers observed over a year-long time period coinciding with historically high meat prices. Our findings reveal nonlinear demands for meat products, with demand being more inelastic at higher prices. Ground beef, steak, and pork chop demands are more sensitive to changes in chicken breast price than the reverse. Moreover, cross-price elasticities between disaggregate meat products shrink as prices rise. Consumers' incomes significantly affect demand inter-relationships. Higher income consumers are more likely to choose steak and chicken breasts and are less likely to choose ground beef, chicken wings, and deli ham than are lower income consumers. High-income consumers tend to be less responsive to own-price changes and more responsive to cross-price changes than lower income consumers. This analysis provides estimates of structural demand parameters that help explain current meat expenditure patterns, and the results have implications for the assumption of linearity often invoked in policy analyses.

Keywords: beef; chicken; choice experiment; heterogeneous consumers; meat demand; mixed logit; nonlinear elasticities; pork (search for similar items in EconPapers)
JEL-codes: C83 D12 Q11 Q18 (search for similar items in EconPapers)
Date: 2016
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Applied Economic Perspectives and Policy is currently edited by Timothy Park, Tomislav Vukina and Ian Sheldon

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