Estimation of Quality Elasticity for Different Types of Meat in Food Basket of Iranian Households

In consumption demand studies, we can consider that choice of quality is affected by consumption decisions (whether to consume or not). The term “quality” refers to any subjective factor that motivates consumers to pay for a good more than its substitutes. Any change in a consumption explanatory variable has two effects: 1) the probability of consuming the good and 2) considerations of quality. The aim of this paper is to examine the effect of factors such as demographics and socio-economic factors on choice of quality in meat consumption including livestock and aggregated meat (livestock, poultry and aquatic). Furthermore, we estimate quality elasticities using cross-sectional survey data for year 2014 among Iranian rural and urban households. The paper applies Heckman two-step method to estimate unknown parameters of participation and consumption equation. Our findings show that the most important variable affecting the choice of meat quality for consumption is household income. In this study, the quality elasticity of income in meat consumption is positive in all samples and there are other variables (gender, age and education of household breadwinner) which have significant effect on quality choice in meat consumption