Working Paper: NBER ID: w16102
Authors: Robert T. Jensen; Nolan H. Miller
Abstract: Many developing countries use food-price subsidies or price controls to improve the nutrition of the poor. However, subsidizing goods on which households spend a high proportion of their budget can create large wealth effects. Consumers may then substitute towards foods with higher non-nutritional attributes (e.g., taste), but lower nutritional content per unit of currency, weakening or perhaps even reversing the intended impact of the subsidy. We analyze data from a randomized program of large price subsidies for poor households in two provinces of China and find no evidence that the subsidies improved nutrition. In fact, it may have had a negative impact for some households.
Keywords: Consumer Price Subsidies; Nutrition; Food Security; Randomized Field Experiment
JEL Codes: I38; O12; Q18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Caloric intake (D15) | Nutrition improvement (I15) |
| Substitution away from subsidized staple (D10) | Nutrition improvement (I15) |
| Consumer price subsidies (P22) | Nutrition improvement (I15) |
| Consumer price subsidies (P22) | Caloric intake (D15) |
| Consumer price subsidies (P22) | Substitution away from subsidized staple (D10) |