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Food Price Changes and Household Welfare: What Do We Learn from Two Different Approaches?

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  • Luca Tiberti
  • Marco Tiberti

Abstract

The use of a marginal approach can significantly distort the predicted effects of large price variations on monetary welfare over the medium- to longer-term. This paper aims at shedding some light on the differences between a marginal approach and a non-separable agricultural household model with behavioural responses. When behavioural adjustments are allowed, households can adapt their consumption and production patterns by resulting in lower deteriorations in household welfare. The second-order effects introduced in the approach with responses reduce the negative effects due to the first-order consumption effects, with significant differences across quintiles. On average, the second-order effects represent up to roughly 40 per cent of total first-order effects.

Suggested Citation

  • Luca Tiberti & Marco Tiberti, 2018. "Food Price Changes and Household Welfare: What Do We Learn from Two Different Approaches?," Journal of Development Studies, Taylor & Francis Journals, vol. 54(1), pages 72-92, January.
    • Handle: RePEc:taf:jdevst:v:54:y:2018:i:1:p:72-92
    DOI: 10.1080/00220388.2016.1269888
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    Cited by:

    1. 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.
    2. 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.
    3. Zhihao Zheng & Yang Gao & Shida R. Henneberry & Rodolfo M. Nayga, 2023. "Policy reform and farmers' heterogeneous response: Measuring the income effects of corn price shocks," Agribusiness, John Wiley & Sons, Ltd., vol. 39(2), pages 564-585, March.

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