Estimating Aggregation Bias in AIDS Model for Meat Demand in Iran

Document Type : Research Article

Authors

• H. Salami
• A. M. Jafari
• Z. Shokoohi

Agricultural Economics, University of Tehran

10.22067/jead2.v1391i1.14104

Abstract

While ignoring income distribution and estimating aggregate demand generally leads to aggregation bias and thus, does not reflect households’ demand properly, yet aggregation bias is rarely considered in empirical demand studies and simply is ignored in most cases. The objective of the present study is to estimate aggregation bias in households’ demand for various types of meats and to evaluate its effects on the magnitudes of price and income elasticities. Ultimately, AIDS demand function was estimated using time series data over the period 1984-2007. Results indicate that correcting the aggregation bias has considerable impacts on the estimated parameters especially on the elasticities.

JEL classification: D1, D12, C51

Keywords

• Aggregation bias
• Demand
• AIDS model
• Meat

20.1001.1.20084722.1391.26.1.8.5

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