INCOME AND ECONOMIES OF SCALE EFFECT ON HOUSEHOLD FOOD DEMAND PATTERN IN PAKISTAN USING PSLM DATA

The study evaluates the household food demand patters for various income groups in Pakistan namely: The Lower Income Group(≤ 5000), Lower-middle Income Group(5001-10000), Middle Income Group(10001-15000), Upper-middle Income Group (15001-20000) and Upper Income Group (20001+), respectively. The study uses Pakistan Social and Living Standard Measurement Survey (PSLM) 2007-08, data conducted by the Federal Bureau of Statistics (FBS), Government of Pakistan, Islamabad. The food expenditures are the sum of expenditures by each household on the following commodity groups: cereals, pulses, fruits, vegetables, dairy products, chicken, meat, fish, condiments, sugar, edible oils, drinks and miscellaneous food products. The household size and income elasticities are estimated to explain the food consumption trends in Pakistan. The results of the study indicate that all the income and household size elasticities are positive and significant at one percent level of significance. Results of the study indicate that food income elasticity is the highest (0.896) for the Lower-Middle Income Group and the same is the lowest (0.706) for Upper Income Group. Similarly, household size elasticity is the highest (0.171) for the Upper Income Group and the same is the lowest (0.057) for Lower Income Group.