Pilferage from Opaque Food Subsidy Programs: Theory and Evidence

30 Pages Posted: 14 Aug 2010 Last revised: 31 Jul 2015

Aashish Mehta

University of California, Santa Barbara

Shikha Jha

Asian Development Bank

Date Written: January 5, 2014

Abstract

Theft rates from subsidized food programs vary greatly and strongly influence program efficiency. Unfortunately, the determinants of these variations remain understudied because the agencies that run these programs seldom publicize the allocations of subsidized food to local markets. We develop a theoretical model of pilferage which predicts that: (i) pilferage from opaque programs is likely to rise more than proportionately with per capita food allocations; (ii) pilferage of inferior goods may be lower in poorer communities; (iii) pilferage rates need not rise as price subsidies are increased; and (iv) pilferage may rise as the relative quality of subsidized food is reduced. A comprehensive literature review and new estimates of pilferage across regions of the Philippines validates these predictions. Our finding, that around 48% of the subsidized rice went missing, is robust to new tests for sampling and recall error. Our policy discussion encourages geographic over administrative targeting, greater transparency in food allocations, and the use of realistic quotas.

Keywords: Pilferage, corruption, transfer program, food subsidy, transparency, opacity, Philippines, targeting

JEL Classification: H31, H42, H24, D73

Suggested Citation

Mehta, Aashish and Jha, Shikha, Pilferage from Opaque Food Subsidy Programs: Theory and Evidence (January 5, 2014). Available at SSRN: https://ssrn.com/abstract=1658481 or http://dx.doi.org/10.2139/ssrn.1658481

Aashish Sunil Mehta (Contact Author)

University of California, Santa Barbara ( email )

Santa Barbara, CA 93106
United States

HOME PAGE: http://www.global.ucsb.edu/people/aashish-mehta

Shikha Jha

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

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