Allocation of Expenditure for Livestock Products Foods in Indonesia: Working-Leser Approach

Abstract

The paper deals with the dependence of the share of households’ livestock products food expenditure on the total expenditure and the household’s size. This problem is important in applied welfare economics. In the study, the Working-Leser model was applied to household’s expenditure data for year 2011, 2012, and 2013. The results of the analysis reveal that basic characteristics of households, such as the household’s size, have direct effects on the consumption patterns of households. Estimated expenditure elasticities for food groups are positive and less than one except for beef, as they moved up to the necessity commodities in 2011-2013. The estimated expenditure  elasticities  for  food  groups  have  decreased  significantly  over  the  time, caused by an increase of total expenditure.  Consistent with Engel’s law, households with lower total expenditure make bigger changes in food expenditure than those with higher total consumption expenditure. These indicate that income has a positive effect on the diversity of these foods group. Share of expenditure for food generally increased with the household’s size. In most samples demand for beef, poultry meat, egg, and milk is expenditure and own-price elastic. On average all food groups investigated are found to be normal goods.