Food expenditure patterns of the generation 50+: an Engel‐curve analysis for Germany

It is the objective of this paper to elaborate determinants of food expenditure patterns for the generation 50+ in Germany on the basis of an Engel‐curve analysis.

Survey data for Germany are taken from the Survey of Health, Ageing and Retirement (SHARE) database. Food‐at‐home (FAH) expenditures of the generation 50+ are explained within a multiple regression analysis first. Then, a double‐hurdle approach based on the probit model and a truncated regression are utilized for reproducing the existence of food‐away‐from‐home (FAFH) expenditures and the share of FAFH expenditures on consumption expenditures across households. Available information on socio‐demographic variables, income and the health status of the respondents are introduced as regressors in the multivariate analyses.

FAH expenditures in the generation 50+ in Germany follow the theoretical expectations underlying Engel functions. With a rising income level, FAH expenditures increase as well but the income share of FAH expenditures declines as does the share of FAH expenditures in total food expenditures. Apart from income, the share of FAH expenditures in food expenditures rises with age, household size, and it is highest for the lowest education level. Moreover, it is higher for West than for East German households. Becoming a pensioner increases absolute FAH expenditures, but does not affect the FAH expenditure share significantly. Very different results are provided by the Engel‐curve analysis for food away from home. A rising income raises FAFH expenditures, whereas becoming a pensioner lowers it. The age variable is insignificant.

The estimated Engel curves suggest that food at home grows less with rising income than food away from home. In particular, the determinants of the per‐capita FAFH expenditures reveal important determinants of expenditures of the generation 50+ in a highly dynamic consumption category. The results have important marketing implications.

Despite the growing economic importance of the generation 50+ in industrialised countries, empirical evidence on how this age group behaves in its food expenditure pattern is often lacking. This study provides a first set of estimated coefficients from Engel curves for Germany. These show how income as well as sociodemographic and health variables affect per‐capita expenditures for FAH and FAFH consumption.