Impact of changing income distribution on fluid milk consumption in urban China

Abstract

PurposeChina has experienced a fast economic growth and shown a significant rise in income inequality in the past decades. During the same period, fluid milk consumption in urban areas has rapidly expanded. The objective of this paper is to analyze and simulate the influence of income distribution changes on fluid milk consumption of households in urban China.Design/methodology/approachThis study applies an inverse hyperbolic sine (IHS) double-hurdle model to modeling at-home fluid milk consumption of households across different income strata based on a sample of 11,861 urban households in five provinces in China, and simulating the impact of changing income distribution, including five income growth patterns, on fluid milk consumption of total households as well as specific household groups.FindingsThe fluid milk consumption in urban China will continue to increase, with the unconditional income elasticity being 0.334 for the full sample and 0.347, 0.335 and 0.162 for the low-, middle-, and high-income groups, respectively. The simulation results show an evidence that, compared with distribution-neutral and disparity-enlarging income growth patterns, a rising income equality would lead to a more significant increase in fluid milk consumption. And the inequality-reducing income growth pattern has a larger impact on fluid milk consumption of households with seniors and no children, as well as households having no local urban household registration (hukou).Practical implicationsThe government should strengthen the supply measures of fluid milk in urban areas, enlarge domestic dairy production, and diversify the sources of milk imports. It is also necessary to subsidize low-income families, especially households with seniors or households migrated from other areas without getting local urban hukou, which could simultaneously improve nutritional benefits and alleviate financial pressures.Originality/valueA simulation considering the evolution of income distribution as well as different household groups is conducted. Widely distributed data with a large sample size and detailed demographic information are used. The problems of zero consumption and non-normal distribution are addressed by the IHS double-hurdle model.

How Does Income Heterogeneity Affect Future Perspectives on Food Consumption? Empirical Evidence from Urban China

“…The predicted results for animal source foods show that eggs, as the most widely consumed source of daily protein intake by Chinese residents, will show a rigid growth trend in consumption demand. Additionally, beef, mutton, dairy, and seafood are high-quality products and essential sources of high-quality protein in the diet [ 2 ]. The growth in demand for these four food items illustrates the growing diversified dietary needs of the Chinese population, which indicates that the Chinese dietary transition will continue to shift from the traditional fiber-dominated food system to a Western-style meat-dominated diet [ 1 , 4 , 10 ].…”

“…The advantage of this extensive dataset is that the chosen households in the survey recorded their food consumption and expenditure characteristics using a diary for over a year, which accurately captured the consumption behavior of Chinese households. The data are widely used in Chinese food consumption and related empirical studies [ 2 , 43 , 44 , 45 ]. Therefore, the dataset used in this study is of high quality and can more realistically reflect the dietary features across different income strata in China.…”

“…The traditional food consumption structure in China that was centered on fiber-dominated foods has gradually shifted to a Western style of food consumption structure centered on animal food sources [ 1 , 2 , 3 ]. According to the National Bureau of Statistics of China (NBSC), in the last 20 years, the per capita consumption of grains and vegetables has dropped by 39.0% and 10.2%, respectively.…”

“…There is heterogeneity in the preferences and consumer behavior of different income groups. Different income groups have different income levels, income growth patterns, and sensitivities to food prices, which is directly reflected in the different elasticities of demand across different income strata [ 2 , 27 ]. This means that using the average elasticity of the entire population to carry out food consumption forecasts may lead to biased results.…”

Shrinking Working-Age Population and Food Demand: Evidence from Rural China

“…The estimation of food demand elasticity is an important aspect of food consumption research [ 25 ]. Researchers have constructed various models to estimate the price elasticity of food demand and the income (or expenditure) elasticity of demand for food among Chinese residents based on utility maximization and budget constraints [ 26 , 27 , 28 , 29 , 30 , 31 , 32 ]. It has been demonstrated that most income elasticity with respect to food demand in China is positive, as reviewed by Chen et al [ 33 ].…”