Analyzing the Policy Implications of Subsidies, Causality Structures, and Pre-Determined Demand on Consumer Food Acquisitions

Abstract

The overall objective of this dissertation is to contribute to a better understanding of consumer food acquisitions by considering policies to promote dietary fiber intake, modeling consumer food acquisitions as a complex system, and by determining the effects of pre-determined demand and regularity conditions on policy analysis. To achieve these objectives, three related empirical investigations of consumer food acquisitions are conducted.

The first paper conducts a panel regression on nine per-capita fiber intake categories taken from purchases of a variety of food to uncover socioeconomic, demographic and government food policy related factors on the per capita intake of dietary fiber in the United States. Although consumer response to 2010 Dietary Guidelines for Americans in terms of increased intake of dietary fiber showed mixed results, a proposed 20% subsidy on prices of fruits and vegetables showed some promising results concerning increasing fiber intake in the U.S. diet.

The second uses individual and household attributes, characteristics of the local food environment, the individual’s dietary pattern, prices, health outcomes, and policy variables jointly to estimate a complex graphical causality structure. The resulting directed acyclic graph shows a number of complicated relationship among these variables. Concerning the paths between poverty, race and food insecurity, we find a number of paths. Thus, policymakers that want to reduce the problems associated with food insecurity need a full picture of the complex interactions among all these variables. In addition, we find variables associated with the Supplemental Nutrition Assistance Program participation and food insecurity to be not strictly endogenous. Obesity was found to be strictly endogenous.

The objective of the third paper is to examine the affect that ignoring pre-determined demand and theoretical regularity conditions will have on consumer food demand. To accomplish this we used the Almost Ideal Demand System because of its wide use in applied policy research. A major result from this study is that elasticities calculated under the presence of pre-commitments are more elastic relative to those calculated without. The result from a proposed subsidy further reinforces the importance of accounting for pre-commitments. In terms of satisfying regularity conditions, the AIDS with pre-commitments performs slightly better. One further important result from this study is not only the need to account for pre-commitments, but also the need to account for the timing of a consumer’s pre-commitments, since pre-committed quantities could vary over time.