Estimates of returns to scale, elasticity of substitution, and the thrifty food plan meal poverty rate from a direct household meal production function

Abstract

Many nutritional policies are designed to make home food production more affordable and yet very little is actually known about the home food production process. A better understanding of home food production can be used to help explain shortcomings in current nutrition policies and consequently help in designing better nutrition policies. This paper provides results from several home meal production function specifications that are rather robust. The median returns to scale and elasticity of substitution between money and time is in the 1.2–1.9 range and .33–.56 range, respectively, indicating increasing returns to scale but difficulty in substituting money for time in home meal production. A home ‘meal poverty rate’ is estimated, which is the percentage of the sample that produces fewer meals at home than consistent with dietary guidelines. The estimated home meal poverty rate is about 85%, which is consistent with recent research taking a less rigorous approach. Though the approach taken here is novel, the overall message is consistent with the recent literature: time is a more important factor in achieving nutritional targets than money.