Demand on Commodities Contributor of Poverty in Aceh Province: Analyses on Urban Households

Abstract

Commodities contributor of poverty is dominated by food commodities. Rice and cigarette filter are commodities that contributes a lot to poverty. Other commodities are; fish, electricity and LPG. This study analyzed the demand of urban household for commodities contributor of poverty in Aceh province by using Almost Ideal Demand System (AIDS) model. Further, this research examines how is the influence of changes in prices and incomes on demand of commodities that cause the increase of poverty, particularly urban poverty. The data used is data collected from Susenas (National Socio-Economic Survey) in 2013 (a cross sectional study), covering 785 urban households Aceh province. In order to solve selectivity bias problem, we add the Inverse Mill Ratio (IMR) variable from Heckman’s Two Step Model. From the calculation of elasticity AIDS models, it shows that the rising price of commodity contributor of poverty is very influential to decrease the household welfare. Electricity and LPG has a value of elastic price elasticity, which shows that rising commodity prices would be devastating to lower household welfare in urban areas. Commodity price elasticity of cigarettes has a positive value. This situation shows that the increasing price of cigarettes has no effect on the demand for cigarettes, even the demand is increasing. This condition is related to the smoking culture of Acehnese people. The results from income elasticity, commodities surveyed are still considered the household basic needs, as seen from the positive and inelastic income elasticity.



Author Information
Chenny Seftarita, Syiah Kuala University, Indonesia

Paper Information
Conference: ACBPP2015
Stream: Urban

This paper is part of the ACBPP2015 Conference Proceedings (View)
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