1 The SUSENAS in the Context of Modelling Consiimer Behavior

A3.1.1 Introduction

Indonesia's National Socio-Economic Survey or SUSENAS, has been extensively used by researchers to explore a wide range of issues. The SUSENAS surveys which date back to 1963-64, were initially conducted as small sample, single period expenditure surveys. Subsequent SUSENAS surveys increasingly widened their coverage and extended the collection of data over multiple subrounds.

In the 1981 SUSENAS VIII, which the thesis makes exclusive use of, 54,000 households from all over the Indonesian archipelago were surveyed in a series of four subrounds covering most of a year. Reported

information falls into 18 categories, providing particulars on household demographics, education, employment, housing and environment, consumption and expenditures, and agricultural production.

The purpose of this Appendix is to survey issues which arise in using the 1981 SUSENAS for econometric modelling of consumer demands. The emphasis is on understanding the nature of the data and the

implications for econometric analysis of consumer behavior. Thus, this Appendix by no means exhausts all the possible issues and pitfalls

confronting the researcher new to the SUSENAS. It should however provide an indication of the form these may take. The Appendix aims to be

constructive about certain problems which are not widely recognized, and do have implications for econometric practice. They are problems which

can often be avoided when using the SUSENAS data. A major point to be made about the SUSENAS is that the accounting practices used are

generally consistent and well defined (though not necessarily well documented) so that what may first appear to be a mistake, will often have a reasonable explanation. Other authors have criticized the SUSENAS on issues not discussed here, such as comparability over time and

consistency with other data sources (Dapice, 1980, and White, 1979). Section A3.1.2 examines the SUSENAS consumption expenditure data. Section A3.1.3 presents a few concluding comments.

A3.1.2 The Consumption Expenditure Data

i) Goods Coverage; Extensive and detailed consumption expenditure data are provided in the SUSENAS. Weekly expenditures and qiaantities, from which an implicit price or "unit value" can be derived, are recorded for a list of 157 food commodities (including tobacco products). Weekly expenditures only are given for a further 19 goods which are harder to quantify in physical units.^^ Information is also given on quarterly expenditures for 77 non food items. Unfortunately, physical quantities are only provided for a selected few of the latter, including housing

(with details on housing characteristics) and energy consumption.

ii) Goods Classification; The classification of goods into categories is generally obvious from the SUSENAS documentation. But there do appear to be some anomalies. For example, four qualities of rice are enumerated in the SUSENAS food consumption section; imported rice, high quality rice, local rice, and glutinous (sticky) rice. One naturally assumes

that of the four categories, local rice was the major component of Indonesia's overall rice consumption in 1981. Data from other sources, including for example, 1981 production and import figures reported in Hears (1984), reinforce this assumption. However, out of the 5218 households sampled, only 1242 are consumers of local rice during the survey period. As section vii) presently discusses, the SUSENAS is conducted as a consumption rather than an expenditure survey. The explanation that consumption has not been measured correctly for these households is therefore not a reasonable one. Only a few zeros can plausibly be attributed to missing observations in a consumption survey. On the other hand, nor can the zeros be a reflection of preferences. A majority of households were undoubtedly consuming rice, and presumably

for a high proportion this was a local variety.

A closer look at the data reveals that a majority of households are consumers of imported rice. This is puzzling as both 1980 and 1981 were good crop years, with the government drastically cutting down rice

imports from two million tons to 480 thousand tons (Hears, 1984). Imports would have accounted for little more than 20 percent of consumption.

An alternative explanation is that rice which was described as "imported" by the interviewer was in fact produced elsewhere in

Indonesia, but "imported" into that particular region. This query was put to 1981 SUSENAS investigators who admitted the possibility that "imported" may have been produced elsewhere in Indonesia. I can find no alternative explanation for the high proportion of consumption devoted to this variety of rice in the sample.

iii) Aggregation of Rice Types; Ideally one might estimate a separate demand equation for each rice type enumerated in the SUSENAS.

Unfortunately, this does not turn out to be feasible. An attempt was initially made to model the demand for local rice alone. The resulting parameter estimates were not meaningful even when applying a Tobit technique to deal with the substantial number of zeros (see note 6, Chapter 3). Compounding this practical difficulty is the seemingly dubious distinction between local and imported rice in the data set. Following the argument in ii) above, it is not clear that imported means brought in from abroad rather than simply from outside the local rice area. At the very least, it appears that the distinction between the two has not been consistently followed. Thus, it can be argued that imported and local rice cannot be meaningfully treated as separate goods. It should also be noted that it appears to be extremely rare for a household to consume both rice types.

The two remaining rice grades: high quality and glutinous rice, are only rarely consumed in the sample. Estimation of demand parameters is thus highly unlikely to be successful. Consequently, as it is not practical to analyze each rice type separately, they are aggregated. Although this is not entirely satisfactory, there is little choice.

iv) Price Variability; It is relatively unusual to estimate consumer demands on cross-sectional data. To succeed in establishing behavioral responses, a degree of goods' price variation in the data is necessary. The extent of price variability in the SUSENAS data is found to be considerable, even in Java. This can be seen in Table A3.1.1 which presents mean prices for both the rice aggregate and local rice at the

TABLE A3.1.1; Implicit Rice Prices in the SUSENAS (Rps/Kilo) Kabupaten Households (no. ) Mean Price Rice Aggregate Mean Price Local Rice 1 Bojonegoro 217 196 211 2 Sukoharjo 157 200 208 3 Bogor 540 227 231 4 Jakarta Barat 356 286 322 5 Banyumas 347 218 234 6 Wonogiri 208 202 211 7 Bantu1 501 210 210 8 Klaten 314 216 222 9 Ponorogo 213 200 197 10 Karanganyar 161 206 191 11 Tegal 266 223 236 12 Sampang 136 219 217 13 Serang 170 247 241 14 Pandeglang 119 241 231 15 Karawang 257 209 196 16 Jepara 203 217 219 17 Pasuruan 258 215 230 18 Yogyakarta 451 248 263 19 Kuningan 109 223 219 20 Lumajang 235 211 233 Total 5218 223 226

kabupaten level.

A number of possible explanations for this variability are noted in Chapter 3. These include: the existence of transport and distribution costs (see Hears, 1984), the effects of government policies of market intervention (Mears, 1984; Hughes,1981a and b) and the fact that there is also temporal variability in the data (due to seasonality effects

captured during the year long survey period). However, some of the price variation may reflect quality heterogeneity and this may have important

implications for the estimation of consumer behavior. This point is taken up in subsection viii).

V) Measurement Period; Various periods of measurement are used for different variables in the SUSENAS. These range from one week to one year. For example, whereas food expenditures refer to a weekly period, household income and total expenditures are monthly and non food

expenditures quarterly. Obviously, it is important to keep this in mind when using these data for research. For most statistical analyses, the variables will have to be standardized to one time span in order to be comparable.

vi) Quantity Standards; The SUSENAS survey documentation specifies kilos as the standard unit for most food items. However, this is not how the data is recorded on the tapes. It became clear that quantities for most foods are in units of ten grams. Thus, quantities should be divided by 100 to get the kilo equivalent. One instance where this mistake will engender others is in calculating prices. As the latter are not directly available in the SUSENAS, expenditure on a good is divided by the

quantity consumed to obtain an implicit price. It follows that if quantities are believed to be expressed in kilos, the commodity will be underpriced by a factor of 100.

vii) Consumption Versus Expenditure Surveys; The SUSENAS is a household consumption rather than expenditure survey. For most food goods, the SUSENAS survey asks for quantities consumed over the survey week rather than expenditures (the latter practice being more common in household budget surveys). In keeping with conventional economic usage, SUSENAS defines "consumption" as any part of purchases, own production, gifts, and rations which is destroyed by use during the week. A considerable effort is made to record the total amount of goods consumed by all

household members from all possible sources in or outside the home during the week. Thus, rice bought in this period but stored away is omitted,

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