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Do Consumer Price Subsidies Really Improve Nutrition?

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  • Robert T. Jensen
  • Nolan H. Miller
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    Abstract

    Many developing countries use food-price subsidies or price controls to improve the nutrition of the poor. However, subsidizing goods on which households spend a high proportion of their budget can create large wealth effects. Consumers may then substitute towards foods with higher non-nutritional attributes (e.g., taste), but lower nutritional content per unit of currency, weakening or perhaps even reversing the intended impact of the subsidy. We analyze data from a randomized program of large price subsidies for poor households in two provinces of China and find no evidence that the subsidies improved nutrition. In fact, it may have had a negative impact for some households.

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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16102.

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    Date of creation: Jun 2010
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    Publication status: published as Jensen, R., Miller, N. 2011. "Do Consumer Price Subsidies Really Improve Nutrition?". Review of Economics and Statistics
    Handle: RePEc:nbr:nberwo:16102

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    1. Strauss, John, 1984. "Joint determination of food consumption and production in rural Sierra Leone : Estimates of a household-firm model," Journal of Development Economics, Elsevier, Elsevier, vol. 14(1), pages 77-103.
    2. Ravallion, Martin, 2007. "Geographic inequity in a decentralized anti-poverty program : a case study of China," Policy Research Working Paper Series 4303, The World Bank.
    3. Thomas, D. & Strauss, J., 1997. "Health and Wages: Evidence on Men and Women in Urban Brazil," Papers, RAND - Reprint Series 97-05, RAND - Reprint Series.
    4. David Stifel & Harold Alderman, 2006. "The "Glass of Milk" Subsidy Program and Malnutrition in Peru," World Bank Economic Review, World Bank Group, World Bank Group, vol. 20(3), pages 421-448.
    5. Behrman, Jere R & Deolalikar, Anil B, 1987. "Will Developing Country Nutrition Improve with Income? A Case Study for Rural South India," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 95(3), pages 492-507, June.
    6. Pitt, Mark M, 1983. "Food Preferences and Nutrition in Rural Bangladesh," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 105-14, February.
    7. Tarozzi, Alessandro, 2005. "The Indian Public Distribution System as provider of food security: Evidence from child nutrition in Andhra Pradesh," European Economic Review, Elsevier, Elsevier, vol. 49(5), pages 1305-1330, July.
    8. Bouis, Howarth E. & Haddad, Lawrence J., 1992. "Are estimates of calorie-income fxelasticities too high? : A recalibration of the plausible range," Journal of Development Economics, Elsevier, Elsevier, vol. 39(2), pages 333-364, October.
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