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Quasi‐ and Simulated‐Likelihood Approaches to Censored Demand Systems: Food Consumption by Food Stamp Recipients in the United States
Author(s) -
Yen Steven T.,
Lin Biing-Hwan,
Smallwood David M.
Publication year - 2003
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/1467-8276.00134
Subject(s) - economics , complementarity (molecular biology) , price elasticity of demand , estimator , econometrics , maximum likelihood , elasticity (physics) , sample (material) , consumption (sociology) , agricultural economics , microeconomics , statistics , mathematics , biology , social science , sociology , genetics , materials science , chemistry , chromatography , composite material
A quasi‐maximum‐likelihood estimator is proposed and applied to a censored Translog demand system for foods, using a sample of food stamp recipients in the United States. The procedure produces remarkably close parameter and elasticity estimates to those of the simulated‐maximum‐likelihood procedure. A two‐step procedure is also considered but it produces different elasticities. Demands are found to be price elastic for pork and fish but price inelastic for all other food products. Gross complementarity and net substitutability are obvious but these cross‐price effects are much less pronounced than own‐price and total food expenditure effects.