Tuesday, June 22, 2010

Nutrition: Taxes and Subsidies

Another new study (Jensen and Miller, 2010, ungated) finds that food subsidies don't improve the nutrition of poor people and may hurt some (HT: Blattman):

NBER Working Paper No. 16102

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

No comments:

Post a Comment