Digitized Indian Micro-Grocery Transactions Reveal that Grain Subsidies Reduce Junk Food Buying by Low-Income Shoppers

56 Pages Posted: 14 Jun 2024

See all articles by Ali Aouad

Ali Aouad

London Business School

Kamalini Ramdas

London Business School - Department of Management Science and Operations

Alp Sungu

University of Pennsylvania - The Wharton School

Date Written: May 29, 2024

Abstract

What foods do people living on under $2 a day buy? How do food subsidies affect their food shopping? The digitization of 39 micro-retail groceries and food vendors in a Mumbai settlement via installing point-of-sale scanners provides novel and objective data on individual shoppers' grocery transactions. Our data reveal that individuals residing in households with children purchase significantly more junk foods, and our experimental evidence suggests that staple food subsidies cause demand substitution towards a healthier diet. Based on over half a million food transactions made by 23,717 consumers, snacks, sugar and soft drinks represent 14.5 percent of food spending in our grocery stores, while rice and wheat combined are 15.6 percent. We randomized 1,255 settlement residents into a weekly rice-and-wheat subsidy disbursed via a government-like subsidy store-or none, for six weeks. Treated subjects substituted away from packaged snacks, sugar and soft drinks spending by 20 to 30 percent more than untreated subjects and increased spices and accompaniments spending by over 30 percent more, with strongest effects for those in households with children. Overall food spending, calories, and nutrients from purchased foods remained unchanged, indicating that the subsidy likely increased the total demand for food and total consumed nutrients.

Keywords: nutrition, poverty, field experiment, technology, substitution

Suggested Citation

Aouad, Ali and Ramdas, Kamalini and Sungu, Alp, Digitized Indian Micro-Grocery Transactions Reveal that Grain Subsidies Reduce Junk Food Buying by Low-Income Shoppers (May 29, 2024). Available at SSRN: https://ssrn.com/abstract=4847728 or http://dx.doi.org/10.2139/ssrn.4847728

Ali Aouad

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

Kamalini Ramdas

London Business School - Department of Management Science and Operations ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

Alp Sungu (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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