The Demand for Meat: Conditional and Unconditional Elasticities

The demand for meat and other foodstuffs is estimated as a part of a four-stage demand system. Correction formulae for price and expenditure elasticities are used to calculate unconditional elasticities by the use of the estimated conditional elasticities. A static specification is rejected at a 5 percent level for each sub-system and a dynamic specification is used to take account of habit formation in consumption. The unconditional own-price elasticities for beef, lamb, pork and chicken are calculated as - 0.48, --0.23, --0.66 and-1.14, respectively. The corresponding conditional elasticities are estimated to be - 0.59, --0.25, -0.78 and-1.15. The unconditional expenditure elasticities are calculated to be 0.72 for beef, 0.42 for lamb, 0.81 for pork and 1.00 for chicken. The corresponding conditional elasticities are estimated to be 0.98, 0.57, I.I I and 1.36. These results show the importance of correcting conditional elasticities before elasticities from different studies are compared or before the elasticities are used for policy purposes.