Influence of the Choice of the Function Form on the Income Elasticity Value of Demand for Food in the Visegrad Group Countries

Abstract:

The households’ demand is one of the main aspects covered in economic research. The level of consumption expenditures and their structure indicate the level of economic development in country, and also resulting from it the level of households wealth. The aim of this paper is to analyze the households’ food expenditures in selected European countries in the period of 1997-2016. The research is conducted for the Visegrad Group countries, which includes the Czech Republic, Hungary, Poland and Slovakia. The level and the structure of food expenditures are a good reflection of the households’ wealth and show the differences between them very well. It must be noted that, independently from the level of wealth, food remains a basic commodity. The nature of this group of goods does not change over the time too. There are a lot of forms of the demand function used in the literature, which show dependence of households’ expenditure, e.g. on food consumption, on the households’ disposable income. In this paper five forms of demand function, including function proposed by Tӧrnqvist and also function known as Working-Leser, are used. The obtained results allowed to indicate the differences in the use of an additional unit of disposable income in terms of food expenditure between households’ in the Visegrad Group countries and the relationship of these differences with the level of an economic development of considered countries. Moreover, the differences in the income elasticities of food demand, resulting from the choice of the form of the demand function, are also presented.