Do Consumer Price Subsidies Really Improve Nutrition?

43 Pages Posted: 21 Jun 2010 Last revised: 2 Jul 2023

See all articles by Robert T. Jensen

Robert T. Jensen

UCLA School of Public Affairs; National Bureau of Economic Research (NBER)

Nolan H. Miller

University of Illinois at Urbana-Champaign

Multiple version iconThere are 2 versions of this paper

Date Written: June 2010

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.

Suggested Citation

Jensen, Robert T. and Miller, Nolan, Do Consumer Price Subsidies Really Improve Nutrition? (June 2010). NBER Working Paper No. w16102, Available at SSRN: https://ssrn.com/abstract=1626591

Robert T. Jensen (Contact Author)

UCLA School of Public Affairs ( email )

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Nolan Miller

University of Illinois at Urbana-Champaign ( email )

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HOME PAGE: http://www.business.illinois.edu/nmiller

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