The Determinants of Consuming Food Away from Home in China: The Role of Hosted Meals (Job Market Paper)

Consumption of food away from home in China is an increasingly important component of the food market as wealthier and busier consumers choose to dine out rather than prepare meals themselves. However, many meals consumed away from home in China are hosted rather than paid for by the individual consuming them, heretofore referred to as hosted meals. Neglecting the role of hosted meals may bias estimates of the parameters determining the demand for food away from home. This study modifies Becker’s household consumption and production model and uses unique data to estimate the role of hosted meals in the probability of eating out and level of expenditures. Our results show that expenditures on food away from home are significantly underestimated by the data most commonly used in food consumption research in China; hosted meals comprise nearly one half of the underestimation. Econometric analysis indicates that consumption of hosted meal by households are significantly and positively related to the likelihood of eating out and the level of expenditures, suggesting that hosted meals shift consumers ’ food purchasing behavior. Key words: Food away from home, hosted meal, China, Becker’s model, double-hurdle estimatio