Demand for ready‐to‐eat cereals with household‐level censored purchase data and nutrition label information: A distance metric approach

We investigate the demand for ready‐to‐eat (RTE) breakfast cereals in the United States using censored, household‐level purchase data matched with product‐level nutrition data. Instead of using a multi‐equation based approach, we propose an alternative approach that relies on Pinkse, Slade, and Brett's (2002) distance‐metric (DM) method, which is highly practical and less burdensome computationally than some multiple‐equation methods. Among other results, we find that households with children are less price sensitive to cereals with whole grain as the first ingredient and to cereals that contain a higher number of fortified vitamins. In addition, we find that households tend to switch between products with similar fiber content and whole grain content profiles.