Hunger and the Demands for Cheap Dietary Staples of the Extreme Poor

Abstract

I construct a tractable structural model of a poor household's demand for cheap dietary staples. This model characterizes the trade-offs that a poor household faces between satiating hunger and satisfying other needs when it spends its scarce resources on food. I use this model to extrapolate the equivalent variation, the willingness to pay, and the dead-weight loss of Jensen and Miller's (2008) price subsidy experiment on cheap dietary staples among the extreme poor (figure 1), and I also use it to extrapolate Pareto improving policies relative to their subsidy treatment (figure 5).

Keywords: Hunger, Staples, Inferior Goods, Giffen Behavior, Giffen Utility, Structural Demand

JEL Classification: D12, I31, O12