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The impact of food inflation on urban poverty and its monetary cost: some back-of-the-envelope calculations

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Sébastien Dessus
Santiago Herrera
Rafael de Hoyos

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Abstract

This article uses a sample of 72 developing countries to estimate the change in the cost of alleviating urban poverty brought about by the recent increase in food prices. This cost is approximated by the change in the poverty deficit (PD), that is, the variation in financial resources required to eliminate poverty under perfect targeting. The results show that, for most countries, the cost represents less than 0.2% of gross domestic product. However, in the most severely affected, it may exceed 3%. In all countries, the change in the PD is mostly due to the negative real income effect of those households that were poor before the price shock, while the cost attributable to new households falling into poverty is negligible. Thus, in countries where transfer mechanisms with effective targeting already exist, the most cost-effective strategy would be to scale up such programs rather than designing tools to identify the new poor. Copyright (c) 2008 International Association of Agricultural Economists.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1574-0862.2008.00348.x
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Article provided by International Association of Agricultural Economists in its journal Agricultural Economics.

Volume (Year): 39 (2008)
Issue (Month): s1 (November)
Pages: 417-429
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Handle: RePEc:bla:agecon:v:39:y:2008:i:s1:p:417-429

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Jed Friedman & James Levinsohn, 2001. "The Distributional Impacts of Indonesia's Financial Crisis on Household Welfare: A "Rapid Response" Methodology," NBER Working Papers 8564, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Seale, James, Jr. & Regmi, Anita & Bernstein, Jason, 2003. "International Evidence On Food Consumption Patterns," Technical Bulletins 33580, United States Department of Agriculture, Economic Research Service. [Downloadable!]
  3. Charles Ackah, & Simon Appleton, . "Food Price Changes and Consumer Welfare in Ghana in the 1990s," Discussion Papers 07/03, University of Nottingham, CREDIT. [Downloadable!]
  4. Atkinson, A B, 1987. "On the Measurement of Poverty," Econometrica, Econometric Society, vol. 55(4), pages 749-64, July. [Downloadable!] (restricted)
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  1. Dessus, Sebastien, 2008. "The short and longer term potential welfare impact of global commodity inflation in Tanzania," Policy Research Working Paper Series 4760, The World Bank. [Downloadable!]
  2. Headey, Derek & Fan, Shenggen, 2008. "Anatomy of a crisis: The causes and consequences of surging food prices," IFPRI discussion papers 831, International Food Policy Research Institute (IFPRI). [Downloadable!]
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  3. Wodon, Quentin & Zaman, Hassan, 2008. "Rising food prices in Sub-Saharan Africa : poverty impact and policy responses," Policy Research Working Paper Series 4738, The World Bank. [Downloadable!]
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