This paper analyses the differences between food and nondurable consumption data. Due to the lack of annual panel data on households' nondurable consumption, many empirical studies that test for the permanent income hypothesis, consumption insurance hypothesis, or to estimate the elasticity of...

This paper examines whether there is a discrepancy in estimating the elasticity of intertemporal substitution using food consumption instead of nondurable consumption data. We show that a discrepancy exists and that the discrepancy increases as nondurable consumption increases.