Incorporating subsistence into hedonic price and nutrient demand models

Economic theory concludes that utility from the consumption of goods increases at a decreasing rate. This condition also applies to the characteristics model of consumer choice. However, most applications for food use hedonic price equations and nutrient demand equations that do not account for declining marginal utility. Another problem is that nutrient valuation studies have not considered the level of nutrient adequacy or status. In addition, nutrient consumption models have not accounted for the nutritional status of the consumer when trying to identify the variables that influence nutrient consumption.

Data from the 1977-78 Nationwide Food Consumption Survey were used to test for differing valuations of nutrients by subsistence, or nutrient status level. Nutrient status for each household was defined using the Nutritional Goals of the USDA Thrifty Food Plan.

Results showed that consumers below subsistence differ in the valuations of nutrients from those above. Households below the defined status level had higher marginal implicit prices for vitamin C and minerals than households above the defined subsistence level. This result is consistent with economic theory.

However, the under subsistence group had lower implicit prices for B vitamins and food energy. In both instances vitamin A had negative implicit prices, which is not consistent with theory but does reflect low vitamin A diets in the United States.

Nutrrient consumption analysis showed that in the under subsistence or nutritionally at-risk households, having a working female household head was significantly and negatively related to nutrient consumption. This result was not found for households that had met their nutritional requirements. Food stamp bonus did not influence the consumption of nutrients for the most nutritionally at risk households but was significantly and positively related to nutrient consumption for marginally at risk households.