Household Demand for Infant Formula: Price Sensitivity, Substitution, and the Role of the WIC Program

Abstract Using 2014–2022 NielsenIQ Homescan data, we estimate an Almost Ideal Demand System for powder, ready-to-use, and concentrate infant formula, correcting for censoring and unit-value price endogeneity. Powder and ready-to-use demand are approximately unit elastic, with asymmetric substitution between the two. Comparing elasticities across income groups and between participants and non-participants in the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), we find price responsiveness broadly stable across groups, an informative result given prior expectations of heterogeneity, providing descriptive, category-level evidence that household demand for infant formula is homogeneous, consistent with the essential nature of infant nutrition.