Mental accounting and consumption of self-produced food

This is an exploratory study on mental accounting and food budgeting of agricultural households, in which we assumed that agricultural households may have a mental account for consumption of their self-produced food. Accordingly, they may reserve a certain quantity of self-produced food as a set budget for own consumption, implying that they may keep on consuming their own produce until they have consumed the quantity set for the mental budget. By making the mental accounting assumption, we hypothesized that the consumption of self-produced food is independent of market price. Also, we hypothesized that the consumption of self-produced food is increasing in the quantity of production if production is lower than the set budget, and independent of the quantity of production if production exceeds the set budget. By applying a double-log demand model and using survey data from six poor rural counties in China, we tested these hypotheses for five food items, which are rice, flour, potatoes, pork, and eggs. We found that the hypothesis of no significant effect of price holds for flour, potatoes, and pork if production is lower than the set budget, and for rice, pork, and eggs if production is higher than the set budget. Production has a significant positive effect on consumption of self-produced food but with a much greater influence when production is lower than the set budget for all five food items. These findings partly support our assumption of mental accounting of self-produced food. Limitations, policy implications, and possible future studies are discussed