The objectives of this research are to analyse food consumption patterns in Japan and to conduct an econometric analysis of Japan's food demand structure. This report pays particular attention to the questions as to whether or not rice is an inferior good (as previous researchers have claimed) and to what extent Japanese food consumption patterns have been Westernized. It is based on the cross-sectional household data of the Annual Report on the Family Income and Expenditure Survey (FIES) for 1997, compiled by the Statistics Bureau of the Management and Coordination Agency in Japan. A total of 95 223 observations were used for 11 major food items. The food items comprised non-glutinous rice, bread, noodles, fresh fish and shellfish, fresh meat, milk, eggs, fresh vegetables, fresh fruits, fats and oil, and food away from home (FAFH). For the meat model, a total of 94 200 observations were used, and the items of interest are beef, pork, poultry, ground meat, ham, sausage and bacon.
In order to deal with the zero-consumption problem associated with household-level microdata, various single-equation models were applied: the Working-Leser model estimated by ordinary least squares (OLS); Heckman's sample selection model; and the Tobit model. For a complete demand system analysis, the linearly approximated almost ideal demand system (LA/AIDS) and the non-linear almost ideal demand system (AIDS) were applied.
Empirical results from the 11 major food items show that the expenditure elasticity of rice is positive and close to one. This proves that rice is consumed in Japan as a normal good, contrary to the results of previous studies. Marshallian uncompensated and Hicksian compensated own-price elasticities for rice are highly elastic in all models, while the own-price elasticity for meat is relatively price-inelastic. Fresh meats and rice are mild complements in all models, although fresh fish and rice show mixed results with respect to their substitution pattern.
Results from the meat model show that the expenditure elasticity of beef is greater than unity, while other meat products are expenditure inelastic. In addition, meat expenditure and price elasticities are very similar to those of Western nations. This study shows that the Japanese meat consumption pattern has become Westernized.
