Application of the Quadratic Almost Ideal Demand System (QUAIDS) Model in the Demand of the Household Animal Sourced Food in West Java

Abstract

This paper aims to determine the effect of demographic and socio-economic factors and household responses to household changes in prices and income against the demand for household animal-sourced food in West Java Province. The study used cross-section data sourced from the National Socio-Economic Survey (SUSENAS) of West Java Province in 2017 analyzed through the Quadratic Almost Ideal Demand System (QUAIDS). The results showed that the demand for household animal-sourced food in West Java was influenced by price, income, and social demographic factors. All groups of animal-sourced food were categorized as normal goods, as characterized by an income elasticity value of more than zero. The income elasticity established meat commodities as the highest with eggs being the lowest. The nature of the commodity determined that all animal-sourced food groups except eggs are luxury goods. Luxury goods are categorized as such due to their above one value of the demand response against changes in income-which in this paper refers to the commodities of fish, meat, poultry, and milk. The own-price elasticity also showed meat as the most responsive commodity to price increases compared to fish, poultry milk, and eggs. The five groups of commodities achieved a negative elasticity value, as reflected by the reduced share when the decreasing demand responds to the commodity price increase. The cross-price elasticity of most animal-sourced food commodity groups achieved negative elasticity values, which indicated that the related animal-sourced food commodity groups were complementary, whereas positive elasticity values indicate the related food commodities group as a substitute.

Implementation of demand system restrictions and accuracy of QUAIDS model estimator on animal food demand in Indonesia

“…In addition to own-price elasticity, the estimator has also been used to seek cross-price elasticity. In accordance with the cross-price elasticity, the animal protein products typify substitutiary or complementary goods [25,34,35,40]. Table 7 shows the results of cross-price elasticity with Marshal lian (uncompensated).…”

“…Using duality theory, it is possible to create another demand function that maximizes output while minimizing spending at a given level of spending. The amount of consumer happiness is an obstacle [24,25]. In 1980, two researchers created a model of the AIDS demand function from this formulation (Almost Ideal Demand System).…”

“…A specific commodity demand is simultaneously influenced by several factors. According to [25], to purchase some i commodities, consumers' decision making will be much affected by the price of the goods (p) and the total expenditure (x) as an income approach. There are several requirements that must be completed by the request function, namely:…”

“…This explains that the animal protein demand model is valid. The availability of the QUAIDS model is a useful model for overcoming the primary issues that are frequently encountered in household consumption surveys when specific commodities are not used, also known as zero consumption or zero expenditure [25].…”

Assessing the Welfare Effects of Rising Prices of Animal-Derived Sources of Food on Urban Households in Indonesia

“…According to Ariningsih (2004), animal protein play a significant role in the development of a nations. Hence, it is of paramount importance that animal protein consumption increase in Indonesia as it is essential in improving health and productivity of Indonesians in the long-term (Kharisma et al 2020).…”