The double-hurdle and infrequency-of-purchase models are generalized with the inverse hyperbolic sine transformation in the dependent variable. The resulting specifications feature more flexible parameterization and error distributions than the untransformed models. Using the 1987–88 Nationwide Food Consumption Survey data on household pork consumption, a nonnested test suggests that the IHS double-hurdle model provides better characterization of the data-generating process than the IHS infrequency-of-purchase model but the elasticities derived from these models are similar. Own-price effects on the probability and level of consumption are negative and significant, but the elasticities are small. Income and cross-price effects are not significant. Household age composition, education, gender of meal planner, and race are among the demographic variables that affect consumption.
Keywords Double-hurdle model - Heteroskedasticity - Infrequency of purchase - Inverse hyperbolic sine - Nationwide Food Consumption Survey - Pork consumption
JEL Classification System-Numbers C5 - D1
Helpful comments from Mary Hama and participants at the 1994 annual conference of the Midwest Econometrics Group are acknowledged. Thanks are also due to Ann M. Simpson for programming assistance in compilation of the data.