Title

Do Consumer Price Subsidies Really Improve Nutrition?

Robert Jensen and Nolan Miller (2008)

KSG Research Working Paper RWP-08-025.

Abstract: Many developing countries use food price subsidies or price controls to improve the nutrition of the poor. However, subsidizing goods that households spend a high proportion of their budget on can create large wealth effects. Consumers may then substitute towards foods with higher non-nutritional attributes like taste, but lower nutritional content per unit currency, weakening or perhaps even reversing the intended impact of the subsidy. We present data from a randomized program of large price subsidies for poor households in two provinces of China. We find that the nutritional impact caused by the subsidy was at best extremely small, and for some households actually negative. (JEL I38; O12; Q18)

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