Influence of butter and margarine prices on the demand for butter in Belgium

This paper discusses three types of models to describe household consumption behaviour using time series of cross section data. Swamy's Random Coefficient Regression Model is shown to be superior to a Fixed Coefficient Model if we are to obtain a macro relation explaining butter consumption. The Ordinary Least Squares Model is rejected on the basis of the data. The regression results give a strong indication that butter is considered a luxury good, although significant differences between regions and social classes exist.