Income and the Demand for Food
with Marc F. Bellemare and Eeshani Kandpal
While microeconomic theory makes unambiguous predictions about the effects of income changes on the demand for specific types of food, empirical estimates of these effects typically suffer from important shortcomings having to do with internal validity, external validity, or both. On the internal validity front, most estimates of the effect of a change in income on the demand for food rely on identification assumptions that can be hard to defend. On the external validity front, those same estimates usually focus on a limited number of commodities or on a single, specific context. Using aggregate data from five randomized controlled trials across three continents and four countries each designed to study the impact of cash transfers, we take an aggregate look at the impact of exogenous income changes on food expenditures, which we use as a proxy for food demand. First, we find that a change in income causes expenditures to increase across all food categories. Second, we find empirical support for Bennett's Law, the empirical regularity whereby as incomes increase, consumers first substitute fine grains for coarse grains, and then protein for carbohydrates. Overall, expenditures on protein are most responsive to an exogenous change in income, followed by expenditures on staples. Finally, across all categories we consider, food seems to be a necessity.
Food Prices, Program Saturation and Cash Transfers
with Jed Friedman, Eeshani Kandpal and Patrick Premand
Early life shocks and human capital: skill development among Australian Aboriginal and Torres Strait Islander children
with Jacek Barszczewski