Quality Elasticity of Vegetable Consumption in Pakistan: A Comparison of Urban and Rural Households

The study estimated quantity, expenditure and quality elasticities for five vegetables namely potato, onion, tomato, cabbage cauliflower and peas, mostly consumed in Pakistan. A comparison of quality elasticity between urban and rural households is provided using Household Integrated Economic Survey (HIES) data from Pakistan Social and Standards Living Measurement (PSLM) 2010-11. The elasticities of interest were obtained via log-log inverse (LLI) functional form of Engel equation. The quantity and expenditure elasticities remained less than unity with reasonable difference in magnitude across urban and rural households. Quantity and expenditure elasticities of all the vegetables were higher for rural households than urban. Quality elasticities for the products under study were calculated as the difference between the expenditure and the corresponding quantity elasticities. Overall, the quality elasticities turned out to be positive (except tomato) with an estimated value of 0.0328, 0.019, 0.0712 and 0.1115 for potato, onion, cabbage cauliflower and peas respectively implying that households in Pakistan purchase higher quality vegetables as their income rises. To be more specific, the quality elasticities for potato, cabbage cauliflower and peas were lower for rural households compared to urban ones, suggesting that urban households are spending relatively more on vegetables quality (except onion and tomato). Hence, from the policy point of view, evidence of positive demand for quality vegetables would facilitate devising food policy for the development of food markets in terms of market segmentation and quality improvements in Pakistan.