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A demographic variable (family size) was introduced into equation [l] by
translating the intercept term. It was assumed that
ai = aio + Ct ait Dt for i = 1, 2, ..., r
where D denotes demographic variables. The resulting model was
wi = aio + Ct ait Dt + Eij In (Pj) + Bi In (XIP) [41
The relevant theoretical restrictions that can be imposed on this demand system
are (Heien and Pompelli 1989)
Data sourqe
Symmetry: aij = aji; (i + j; i, j = 1, 2,. . . , r)
Homogeneity: aij = 0; (i = 1, 2, . . ., r)
Adding-up: Ci aio = 1 ; Ei bi = 0; Ci aij = 0; (t = 1, 2, . . . , v)
The data on food and nonfood consun~ption from the impact study on FSR in Binong
during the crop year 1989-90 were used in this analysis. Data were maintained for two
rice seasons and a third season of crops and fish production within a year. Data were
collected directly from the selected households. Information on individual household
consumption was converted into per capita consumption per month. The aggregated
data were divided by family size to obtain per capita consumption.
All expenditures were classified into two major groups (food and nonfood
items). Because economic theory provides no guidance on the composition of food
groups, the decision is usually made on an ad hoc basis by the researcher. In this study,
the proposed list of food groups and nonfood groups depended on the ability of farmers
and consumers to recall the items they had consumed.
With regard to per capita expenditure of the selected households, food items
were classified into nine subgroups: rice; meat; fresh fish; dry fish; eggs; vegetables;
spices; cooking oil; and sugar, tea, and coffee. There were also nine subgroups of
nonfood items: firewood and kerosene; soap and tooth paste; electricity; education;
clothes; taxes and other obligations; health; social activities and cultural ceremony; and
asset accumulation.