In the Agris Online Papers in Economics and Informatics, I read an article called “How the Elasticity of Meat Consumption differs between social groups? A case of the UK and the Czech Republic”. The purpose of the article is to show different consumer behavior between ten different income levels and different countries to examine the elasticity distance between income levels in the UK (a high-income country) and the Czech Republic (a low-income country) within the context of meat consumption. Data on the Czech Republic come from household budget surveys (HBS). In contrast, corresponding data on UK consumers was drawn from the Living Costs and Food survey.
The article aims to calculate the income elasticity of demand and consumption saturation of major groups of meat and meat products in the Czech Republic and the United Kingdom in different income groups. The purpose of this article is to show different consumer behavior between the 10 different income deciles. The article particularly compares consumption patterns and the influence of price on consumption patterns in the UK and the Czech Republic between 2000 and 2017. As stated in the article, “ Generally, all meat products’ income elasticities of demand tend to decline as per capita income increases. The income elasticity of demand also depends on the importance of a particular food category in consumption”. This is evident when comparing the varying countries of the UK and the Czech Republic. In high-income countries, like the UK, the income elasticity of demand is significantly higher for high-income households than for low-income households. The authors explain the effect of the substitution of normal goods for exclusive goods when receiving an increase in income. The opposite occurs in low-income countries, such as the Czech Republic.
To support the evidence presented in the 18-page article, there are 2 tables and 2 bar graphs. Table #1 displays the income elasticity of demand coefficients of meat consumption in the UK. This table confirms the empirical results that there is no clear relation between meat consumption and income. Still, there is a set of high-income countries where meat consumption is relatively low. Instead of the linear relationship between income and meat consumption, the author suggests that there is a non-linear, U-shaped relationship between meat consumption and income. This basically means that initially, meat consumption increases with income, but from a certain point onward, higher levels of income lead to lower levels of meat consumption. Alternatively, the table for the income elasticity of meat consumption in the Czech Republic shows the opposite. In this table, there is a positive relationship between income development and meat consumption in the Czech Republic. Thus, results indicate completely different dietary trends between the two countries. The two bar graphs labeled “Average annual growth of per-unit meat prices (%)” and “Average annual growth of natural meat consumption (%)” display the same information.
The findings in this article directly correlate to some core topics we have discussed in class. First off, the main topic discussed in this article was the income elasticity of demand. The formula for the income elasticity of demand is the percentage change in quantity demanded of a product divided by the percentage change of income. The principles of this formula are simple, when income rises, the quantity demanded of a good decreases which means the good is considered an inferior good. In opposition, when income rises and the quantity demanded of a good increases, the good is considered a normal good. In the UK, there is no linear relationship between meat consumption and income, so meat consumption cannot be labeled as a normal or inferior good. However, in low-income countries, like the Czech Republic, when income rises, meat consumption simultaneously rises which means meat consumption is considered a normal good there.
I also believe this article relates to the “Demand shifters” topic we learned about in class. As we learned in class, one of the demand shifters is “taste/preference”. This means that demand for a good or service can vary based on one’s taste or preference regarding that good or service. For instance, to reference the article I read, stated, “The main reasons why the consumption of beef meat dropped and the popularity of poultry meat increased in the Czech Republic in the last thirty years are dietary concerns (consumers prefer poultry meat to red meat) and price relations (poultry meat became cheaper due to large-scale production and the price pressure of foreign production)”. Evidently, taste or preference for a good or service, such as meat, can directly dictate one’s demand. Taste/preference can mean a literal dietary preference, or simply any general preference one has.