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

77 Pages Posted: 3 Apr 2019 Last revised: 6 Jul 2023

See all articles by Ingvild Almås

Ingvild Almås

Stockholm University - Institute for International Economic Studies (IIES)

Johannes Haushofer

Research Institute of Industrial Economics (IFN); Stockholm University - Department of Economics; Max Planck Institute for Research on Collective Goods

Jeremy Shapiro

Busara Center for Behavioral Economics

Date Written: March 2019

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.

Suggested Citation

Almås, Ingvild and Haushofer, Johannes and Shapiro, Jeremy, The Income Elasticity for Nutrition: Evidence from Unconditional Cash Transfers in Kenya (March 2019). NBER Working Paper No. w25711, Available at SSRN: https://ssrn.com/abstract=3363449

Ingvild Almås (Contact Author)

Stockholm University - Institute for International Economic Studies (IIES) ( email )

Stockholm, SE-10691
Sweden

Johannes Haushofer

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Stockholm University - Department of Economics ( email )

Stockholms universitet
Stockholm, 106 91
Sweden

Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

Jeremy Shapiro

Busara Center for Behavioral Economics ( email )

Nairobi
Kenya

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