Thomas Bayes Goes to the Virtual Supermarket: Combining Prior Food Price Elasticities and Experimental Data in a Large Demand System of Dietary Choices

55 Pages Posted: 13 Oct 2018

See all articles by Nhung Nghiem

Nhung Nghiem

University of Otago - University of Otago Wellington

Liana Jacobi

University of Melbourne - Faculty of Business and Economics; IZA Institute of Labor Economics

Andres Ramirez Hassan

Universidad EAFIT - School of Economics and Finance - Center for Research in Economic & Finance (CIEF)

Wilma Waterlander

University of Amsterdam

Tony Blakely

University of Melbourne - Population Interventions Unit; University of Melbourne

Date Written: September 19, 2018

Abstract

Food price elasticities (PE) are essential for evaluating impacts of food pricing interventions. Existing econometric estimates of food PEs are often poor, being based on single observational data sets without much variation in prices and failing to utilise prior information. In order to provide better PE estimates for policy analysis, this paper innovates the use of experimental purchasing data from a recent virtual supermarket experiment to estimate the PE matrix for a large set of foods via a Linear Almost Ideal Demand System (AIDS) and proposes an approach to incorporate PE results from observational data studies in the empirical results within a Bayesian estimation framework. We combine a multi-stage Bayesian approach to estimate a set of demand systems using the Edgerton approach to aggregate elasticities to obtain Marshallian and Hicksian PE matrices for a total of 23 food groups.

Keywords: Bayesian Analysis, Laids Food Demand, Gibbs Sampler, Virtual Supermarket, New Zealand, Public Health

JEL Classification: I18, C93, C11

Suggested Citation

Nghiem, Nhung and Jacobi, Liana and Ramirez Hassan, Andres and Waterlander, Wilma and Blakely, Tony, Thomas Bayes Goes to the Virtual Supermarket: Combining Prior Food Price Elasticities and Experimental Data in a Large Demand System of Dietary Choices (September 19, 2018). Available at SSRN: https://ssrn.com/abstract=3252225 or http://dx.doi.org/10.2139/ssrn.3252225

Nhung Nghiem (Contact Author)

University of Otago - University of Otago Wellington

Wellington
New Zealand

Liana Jacobi

University of Melbourne - Faculty of Business and Economics ( email )

Victoria, 3010
Australia

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Andres Ramirez Hassan

Universidad EAFIT - School of Economics and Finance - Center for Research in Economic & Finance (CIEF) ( email )

Carrera 49 No. 7 South - 50
Bogotá
Colombia
05742619500 (Phone)

Wilma Waterlander

University of Amsterdam ( email )

Spui 21
Amsterdam, 1018 WB
Netherlands

Tony Blakely

University of Melbourne - Population Interventions Unit ( email )

Melbourne
Australia

University of Melbourne ( email )

185 Pelham Street
Carlton, Victoria 3053
Australia

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