How Consumer Price Subsidies Affect Nutrition

39 Pages Posted: 6 Sep 2013 Last revised: 20 Jan 2014

See all articles by Neeraj Kaushal

Neeraj Kaushal

Columbia University - School of Social Work; National Bureau of Economic Research (NBER)

Felix Muchomba

Columbia University

Date Written: September 2013

Abstract

We study the effect on nutrition of an exogenous increase in food grain subsidy in rural India resulting from a program targeting the poor. Our analysis suggests that increase in income resulting from the food price subsidy changed consumption patterns in favor of the subsidized grains and certain more expensive sources of calorie, and lowered consumption of coarse grains that are cheaper, yet taste-wise, inferior sources of nutrition, but had no effect on calorie, protein and fat intake in poor households. Further, our analysis shows that households allocated some of the increase in income from food price subsidy to expenditures on non-food items. Estimates of the price effect of food price subsidy on the three measures of nutrition are also negligible. We find evidence that the decline in the price of wheat and rice, changed consumption patterns toward increased consumption of wheat and rice and lower consumption of coarse grains, the unsubsidized staple food. Our analysis thus suggests that food price subsidies are likely to affect agriculture markets without impacting nutrition.

Suggested Citation

Kaushal, Neeraj and Muchomba, Felix, How Consumer Price Subsidies Affect Nutrition (September 2013). NBER Working Paper No. w19404. Available at SSRN: https://ssrn.com/abstract=2321456

Neeraj Kaushal (Contact Author)

Columbia University - School of Social Work ( email )

622 W. 113th Street
New York, NY 10025
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Felix Muchomba

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

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