CORRECTING FOR MEASUREMENT ERROR IN FOOD DEMAND ESTIMATION

Use of disappearance data as proxies for actual consumption causes inc onsistent estimates of own-price retail demand elasticities. A system of equations describing consumer, processor, and producer behavior is used to consistently estimate the retail demand elasticity for beef us ing available data while avoiding the restrictive assumption of fixed input proportions implicit in disappearance data. This approach yields an estimate of the own-price retail demand elasticity for beef of -0. 45, which is more inelastic than the estimate (-0.66) obtained using a traditional approach. The methodology is applicable to other food com modities for which disappearance data serve as proxies for actual cons umption.