ANIMAL FOOD DEMAND IN JAKARTA, INDONESIA: USING QUADRATIC ALMOST IDEAL DEMAND SYSTEM

Abstract

All of the households in Jakarta are urban households, but when viewed from the income elasticity of animal food, all animal food is still a luxury item except eggs. This study aims to analyze the influence of socio-demographic variables, price, and income on animal food demand in Jakarta. The estimation of demand system using Quadratic Almost Ideal Demand System model with the application of Iterated Non-Linear Seemingly Unrelated Regression. Research data using Susenas 2016 is 4,298 households. The results showed that a 1% increase in income would increase demand for eggs, chicken, beef, fish and milk by 0.38%, 1.07%, 2.19%, 1.44%, and 1.84%. Eggs are normal goods while chicken, beef, fish, and milk are luxury items. Beef is most sensitive to income changes. Beef is a substitute for eggs and chicken. The increase in household members of 1 person decreased the consumption of beef by 0.07%. Households in Jakarta are very sensitive to changes in the price of chicken, beef, and fish. To meet protein consumption according to national standards, the stability of beef prices needs to be maintained. In Jakarta, pricing policies are more effective than income policies.

Keywords

• Animal food
• protein
• demand system
• urban household