Assessment of Quality Elasticity for Tea Consumption in Pakistan: Insights from HIES Data
DOI:
https://doi.org/10.61506/01.00567Keywords:
Tea Consumption, quantity elasticity, expenditure elasticity, quality elasticity, urban/rural households, PakistanAbstract
The study estimated quantity, expenditure and quality elasticities for tea (black & green) in Pakistan. A comparison of quality elasticity between urban and rural households is provided using data from the Households Integrated Economic Survey (HIES) part of Pakistan Social and Standards Living Measurement (PSLM) 2010-11. The elasticities of interest were obtained via log-log inverse functional form of Engel equation. Coefficients of parameters were found statistically significant reflecting that the log-log-inverse (LLI) formulation of the model fit the data well and validate nonlinear behavior of Engel relationship for tea consumption in Pakistan. The quantity and expenditure elasticity remained less than unity suggesting that the product under study were treated as essential. Quantity and expenditure elasticities were higher for rural households than urban ones. The quality elasticity, which is the difference between expenditure and quantity elasticity, turned out to be positive with an estimated value of 0.0137 for households in Pakistan (overall), 0.0022 for urban households and negative (-0.002) for rural ones. Overall, the quality elasticity with positive signs implied that Pakistani households in general and urban households in particular are more likely to purchase high quality tea as their income rise.
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