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Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute
Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute

Economics and Business

Quarterly Reviews

ISSN 2775-9237 (Online)

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
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Published: 18 March 2023

Assessing the Welfare Effects of Rising Prices of Animal-Derived Sources of Food on Urban Households in Indonesia

Nikmatul Khoiriyah, David Forgenie, Atiek Iriany, Hadi Apriliawan

University of Islam Malang (Indonesia), The University of the West Indies, St. Augustine Campus (Trinidad and Tobago), University of Brawijaya (Indonesia)

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, management journal

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doi

10.31014/aior.1992.06.01.495

Pages: 165-178

Keywords: Food Price, Indonesia, QUAIDS, Urban, Welfare

Abstract

Animal-derived food is a major source of protein for urban households in Indonesia. Rise in animal-derived food prices reduces consumption, causing households to consume less food than the recommended amount which can lead to serious health deficiencies that has serious implications for health and well-being in the long-run. The effects of rising prices of animal-derived protein source on urban households’ welfare is examined in this study. The Quadratic Almost Ideal Demand System model is used to analyze household consumption patterns, while the welfare effects of rising prices is measured using compensating and equivalent variation. The data for this study came from the 2021 National Socio-Economic Survey (Susenas), which included 112,569 households. Price elasticity of demand reveals that fish was the most responsive to changes in price while eggs were the least. Based on income elasticity of demand, all animal-derived sources of protein were found to be luxurious except for eggs which were found to be a normal good. The welfare exercise found that increase in prices resulted in approximately Rp. 23,262 per month in welfare loss when there is no substitution. However, when there is substitution, welfare loss as measured by CV was Rp. 22,308 and EV was Rp. 21,052 per month. Urban households were found to experience the most welfare loss from price increase of eggs but the least from fish. It was also found that when urban households are able to substitute when prices increase, the welfare impact is smaller than when they are not able to do so. Hence, policy aimed at diversifying urban households’ consumption patterns when it comes to protein consumption is suggested as a means of attaining protein food and nutrition security.

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