Chapter 3


 INCOME ELASTICITIES OF DEMAND IN JAMAICA

 A summary of the evidence as to income elasticities for the principal food groups as
devised from the Jamaica survey is given in Table 3. 3. i. For six of the most important
of these groups the regression coefficients from which the elasticities are calculated are
shown in Table 3.3. ii which also gives the corresponding coefficients of correlation and
the estimated standard errors of both the regression and the correlation coefficients.

 The figures in the right-hand column of Table 3. 3. i are the general averages which
have been derived from the survey figures after making the adjustments already described
in order to reach estimates which can be taken as applicable to the population as a whole.
Before using these figures as the basis of the estimated elasticities required for purposes
of projection, however, it is desirable to consider them in relation to the changes in ave-
rage income and consumption levels in Jamaica which have taken place during the last de-
cade. So far as possible two sources of information as to changes in consumption between
1950 and 1958 have been used; these are the quantitative estimates, where available, of
average consumption per capital, and a deflated series of estimates of personal expenditure
per capital on certain commodities derived by applying an index number of retail prices to
the national income estimates of expenditure at current prices in different years. Unfor-
tunately, however, the dearth of reliable statistical material has made it necessary to con-
fine this examination to a few of the major products or product-groups.

 In respect of meat and dairy products and of total food expenditure there is good agree-
 ment between the recorded changes and those calculated from the estimated elasticities.
 In the case of sugar, estimates published by FAO (Ref. D. 8) show an increase in per ca-
 pita consumption in Jamaica between 1950 and 1958 of 19 percent, which is reasonably con-
 sistent with the estimated elasticity derived from the survey (though the latter relates to
 a group of products including confectionery for which the income elasticity is probably high-
 er than for sugar itself). For the remaining food groups however the agreement is less
 close, and in some cases there is difficulty in reconciling the estimated actual changes in
 consumption with the survey evidence as to demand elasticity.

 In the case of oils and fats, supply statistics appear to place it beyond doubt that average
 consumption per capital rose between 1950 and 1958 by about 80 percent, which implies a
 much higher income elasticity than is warranted by the survey evidence. Retail prices of
 these products appear to have fallen somewhat in relation to those of food in general, but
 the increased consumption cannot be explained by substitution at the expense of butter since
 the consumption per capital of butter itself more than doubled during the period. Domestic
 production of copra in Jamaica was however much lower in 1950 than in 1958 since recovery