Potato Consumption in Canada: Is It Becoming a Normal Good?

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  • The notion that a potato is an inferior good dates back to the mid-nineteenth century when British economist Robert Giffen (and later Paul Samuelson) asserted that potato constituted a Giffen good in historic Ireland (McDonough and Eisenhauer). Potato has become a leading practical example of an inferior good, if not a Giffen good (Rosen). By definition, consumption of potato would decrease with income, if it is an inferior good. While potato consumption has been found to be negatively related to GNP per capita in OECD countries (Anderson and Senauer), recent consumption trends in Canada and the United States seem to suggest the opposite. Per capital potato consumption in Canada fluctuated between 60 kg and 80 kg during 1978-97, but stabilized around 77 kg after 1993 (Figure 1). During the same period, consumption in the United States increased steadily between 1978 and 1997, rising from 54.3 kg in 1978 to 64.5 jg per capita in 1997 (figure 1). These consumption trends raise an interesting question: is potato still an inferior good in North America? The answer to this question is important because potato remains an important food item in many countries and many domestic agricultural as well as international trade policies are centered on potato. Such policies would be misdirected if they were based on the misbelief that potato is an inferior good, without a rigorous and robust empirical support for that belief. The objective of this paper is to estimate and evaluate the demand elasticities for potato products in Canada. The survey data we use allow investigation of the demand for fresh as well as other forms of potato products.

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    Attribution-NonCommercial-NoDerivatives 3.0 International