Predicting Welfare Effects of Food Price Shocks. A Comparative Analysis

Following the 2007/09 and subsequent world food price shocks, a growing number of simulation studies predicted their implications on food security. Studies that only require pre-price-hike data and the specification of relevant price or income changes have been advocated as a potential tool to guide the planning and targeting of mitigation programs. A critical research gap remains with comparing simulation outcomes across studies that use different, established methods on the same subject. In this paper we examine the extent to which different simulation methods drive differences in similar outcome variables and in potential targeting efforts. For this we build on three simulation studies set in Malawi, using 2004/05 LSMS data. We harmonize simulation scenarios and systematically adjust relevant parameters for the methodological comparison. We find overlaps in simulation outcomes to depend on scenarios and time horizons under consideration and to be driven by the study context. In case of Malawi, for a reasonable set of price changes, mean outcomes on district levels are fairly robust to underlying methodologies.