Investigation of patterns in food-away-from-home expenditure for China

Using China's urban household-level survey data from 1992 and 1998, we study household food-away-from-home (FAFH) expenditure across the two time periods and across regions. We use a popular parametric linear specification and a newly developed nonparametric estimation method (with mixed categorical and continuous variables) to estimate the FAFH expenditure function. The nonparametric model shows that the income elasticities have increased from 1992 to 1998, while the parametric model suggests the contrary. The goodness-of-fit analysis, a model specification test, and in-sample analysis all suggest that the nonparametric method gives better description of the data than the parametric approach. The nonparametric estimation results also reveal other interesting FAFH consumption patterns which are not detected by the parametric method. (C) 2004 Elsevier Inc. All rights reserved.