The demand for value-added and convenience: A household production approach

Americans are consuming more complex carbohydrate-based foods. This study applies a household production model to investigate the role of US households’ demand for value-added and convenience, both defined as nonmarket commodities, in complex carbohydrate consumption. Empirical estimates of a translog household production system using Nationwide Food Consumption Survey (NFCS) data from 1977-1978 and 1987-1988 provide estimates of these commodities’ shadow values. The shadow values are used, in turn, to estimate demand functions for value-added and convenience. The results show highly significant and negative demand elasticities for both commodities, suggesting that this is a valuable tool for analyzing the structure of their demand.