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The distributional effect of a large rice price increase on welfare and poverty in Bangladesh

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  • Hasan, Syed A.

Abstract

This paper studies the distributional effect of a sharp rice price increase on welfare and poverty in Bangladesh. We employ household consumption data and include the indirect effect of price responses to estimate the welfare loss. Our findings suggest that the estimated welfare effect can be misleading if household responses to rice consumption and production are ignored. This study further supports the hypothesis that the poor are the main victims of such a shock. Our examination also indicates that a higher rice price may increase or decrease the poverty head-count ratio, depending on the choice of the poverty line, but worsens the country’s poverty situation when it is measured by the per capita consumption gap. Our analysis reveals that the government can play a central role to prevent and mitigate such shocks, particularly in the medium to long run. On the methodological side, we observe that consumption provides a more consistent outcome across different methods of analysis than household income.

Suggested Citation

  • Hasan, Syed A., 2017. "The distributional effect of a large rice price increase on welfare and poverty in Bangladesh," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 61(1), January.
    • Handle: RePEc:ags:aareaj:301120
    DOI: 10.22004/ag.econ.301120
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    Cited by:

    1. John Gibson & Bonggeun Kim, 2017. "30 Years of Being Wrong: A Systematic Review and Critical Test of the Cox and Wohlgenant Approach to Quality-Adjusted Prices in Demand Analysis," Working Papers in Economics 17/16, University of Waikato.
    2. John Gibson & Alessandro Romeo, 2017. "Fiscal-Food Policies are Likely Misinformed by Biased Price Elasticities from Household Surveys: Evidence from Melanesia," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 4(3), pages 405-416, September.
    3. Iqbal, Md Zabid, 2018. "The Effects of 2016-2017 Rice Price Increase on Household Welfare and Poverty in Rural Bangladesh," 2018 Annual Meeting, August 5-7, Washington, D.C. 273884, Agricultural and Applied Economics Association.
    4. Balié, Jean & Minot, Nicholas & Valera, Harold Glenn A., 2021. "Distributional impacts of the rice tariffication policy in the Philippines," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 289-306.
    5. Syed Hasan & Nazmun Ratna & Shamim Shakur, 2019. "Exchange rate, remittances and expenditure of foreign-bornhouseholds: evidence from Australia," Discussion Papers 1901, School of Economics and Finance, Massey University, New Zealand.
    6. Md Zabid Iqbal, 2019. "The Effects of a Large Rice Price Increase on Household Welfare and Poverty in Rural Bangladesh," Economics Bulletin, AccessEcon, vol. 39(1), pages 295-309.
    7. Mohammad Hasan Mobarok & Wyatt Thompson & Theodoros Skevas, 2021. "COVID-19 and Policy Impacts on the Bangladesh Rice Market and Food Security," Sustainability, MDPI, vol. 13(11), pages 1-18, May.
    8. Hoang, Hoa T.K. & Thompson, Wyatt & Kwon, Sanguk, 2021. "Low-Income Household Food Consumption Consequences of Rice Policy and Pandemic Impacts on Income and Price in Thailand," Journal of Food Distribution Research, Food Distribution Research Society, vol. 52(2), July.

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