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The Income Elasticity for Nutrition: Evidence from Unconditional Cash Transfers in Kenya

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  • Ingvild Almås
  • Johannes Haushofer
  • Anders Kjelsrud

Abstract

Estimates of the effect of budget changes on food and nutrition for poor households is an important input to the design of efficient programs to reduce poverty and improve nutrition. Yet, good such estimates are challenging to obtain from observational data alone because of potential endogeneity issues. In this paper we estimate the expenditure elasticitity of food using exogenous variation in budget from two unconditional cash transfer programs in rural Kenya, combined with detailed data on food expenditure, nutrition and prices. Our data allow us to estimate a demand system, using the randomized cash transfers as an instrument for total expenditure, and taking into account potential general equilibrium effects of the program on prices. We find that the average income elasticity of food expenditure is 0.87, and of calorie consumption is 0.67. Although these elasticities are higher than those reported in some of the previous studies, they are significantly lower than those obtained using a non-experimental analysis in our context.

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  • Ingvild Almås & Johannes Haushofer & Anders Kjelsrud, 2019. "The Income Elasticity for Nutrition: Evidence from Unconditional Cash Transfers in Kenya," NBER Working Papers 25711, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:25711
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    Cited by:

    1. Dietrich, Stephan & Schmerzeck, Georg, 2020. "For real? Income and non-income effects of cash transfers on the demand for food," MERIT Working Papers 2020-006, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. McCullough, Ellen & Zhen, Chen & Shin, Soye & Lu, Meichen & Arsenault, Joanne, 2022. "The role of food preferences in determining diet quality for Tanzanian consumers," Journal of Development Economics, Elsevier, vol. 155(C).
    3. Ongudi, Silas & Thiam, Djiby, 2021. "The Direct and Indirect Effects of Income on the Consumption of Nutrients: Experimental Evidence from Kenya," 2021 Conference, August 17-31, 2021, Virtual 314956, International Association of Agricultural Economists.

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    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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