An Analysis of U.S. Household Dairy Demand

by Christopher G. Davis, Diansheng Dong, Donald Blayney, and Ashley Owens

This report examines retail purchase data for 12 dairy products and margarine from the Nielsen 2007 Homescan retail data. Selected demographic and socioeconomic variables included in the Nielsen data are analyzed for their effects on aggregate demand and expenditure elasticities for the selected products. A censored demand system is used to derive the demand elasticities. The resulting estimates revealed that the magnitudes of 10 of the 13 own-price elasticities are greater than 1; substitute relationships are found among most dairy categories; expenditure elasticities are 1 or greater for 7 of the 13 products; and demographic and socioeconomic variables are statistically significant contributors to dairy demand.

Keywords: Butter, cheese, censored demand, elasticities, margarine, milk, Nielsen Homescan data, yogurt

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