TFK – Health, Hunger and the Household in Developing Countries
As one of the largest and fastest growing economies in the developing world, India offers a wealth of unique economic knowledge, data, and statistics. Historical economic data are carefully examined and analyzed to decipher trends that can ultimately guide policy makers towards informed, productive decisions. As such, India’s progress over the past few decades has been scrutinized and distilled to uncover the microeconomic behavior of an accelerating, developing economy. Real Gross Domestic Product (GDP) in India grew annually at 3.95 and 5.4% from 1980 to 2005 and 2000 to 2005, respectively; moreover, its real per capita income has more than doubled since 1950 and its real per capita consumption has grown consistently between 2 and 4% each year. Oddly enough, this overall decrease in poverty has lead to a decline in the consumption of calories among other nutrients: a curious phenomenon. Research conducted by Angus Deaton and Jean Drèze unveils a valid reason for the decline while economists Raghav Gaiha, Raghbendra Jha, and Vani S. Kulkarni perform similar regressions to find a more concise and robust—and in fact—supplementary answer to the aforementioned occurrence.
In their paper titled, “Food and Nutrition in India: Facts and Interpretations,” Deaton and Drèze propose a solution to the inverse relationship between income and caloric intake. Initially, they plotted the calorie Engel curves for rural and urban India (plotting the logarithm of household per capita expenditure against the logarithm of household calories) to find a downward shifting trend between 1983 and 2004—indicating a decline in caloric necessity. While it seems logical to assume that people straddling the poverty line would increase their consumption in conjunction with their increased income, they present a counter-intuitive hypothesis that seems to hold merit. Before they delve into their findings, they exhaustively eliminate several potential contributors to the phenomenon. The first candidate is the price of food. The price of food is undeniably tied to the price of calories (essentially a translation of units of measurement for non-zero calorie items); consequently, an increase in the price of food increases the price of calories. They examined four indexes that measure food to general prices, which showed fluctuation over time but the relative price of food in both the rural and urban sectors was lower in 2004. If not as a whole, maybe just a staple component of food prices influenced the decline in calories. Plausibly, the price of coarse cereal could have had a serious impact on caloric intake; nevertheless, this proved to be patently false for two reasons: if normal cereal prices rose, substitution would take place for an inferior cereal like wheat (containing equal calories) or coarse cereal would rise more than general food prices during the period of the study (disproved by a calculation derived from an NSS survey in Table 14). Another claim is that impoverishment is more widespread than currently thought, but this directly contradicts previous data indicating heightened income. Another rational, yet unjustified, conclusion is that the price effects of “non-food” necessities effectively restrict their budget. Finally, there could be some bias factored into the calorie Engel Curves, which could potentially be flatter or even downward sloping.
Ultimately, Deaton and Drèze posit that India has a declining need to consume calories for several reasons. They attribute this decline to “an improved epidemiological environment,” a reduction in activity levels due to technological progress like irrigation, improved modes of transportation and the “extension of road coverage”, and the ownership of vehicles and television (Food, 57). In a recent study, 50% of households in rural India reported owning a bicycle (as opposed to 17% in 1987) and 31% of households in urban India owned a motorcycle and 6% owned a car (Food, 57). Moreover, 30% of rural and 74% of urban households own a television, significantly increasing the amount of “sedentary leisure activity,” (Food, 57). This data provides a strong argument for the hypothesis touted by Deaton and Drèze. Further research in the same vein, however, postulates an alternative solution to the problem.
In “Demand for Nutrients in India, 1993-2004” Gaiha et al. regress similar data from a smaller time frame to provide an alternative, more robust hypothesis. They constructed an equation with a dummy variable for time to “capture the health improvements and less strenuous activity patterns” and the “interactions of food price variables” to measure the impact of price effects over time (Demand, 4). In this way, the team attempted to provide legitimacy to the Deaton and Drèze hypothesis, which they considered to be conjecture; simultaneously, they aim to provide strong evidence for the corollary of price effects. Their research is primarily focused in demand theory; accordingly, they assume that a correlation between food prices and per capita expenditure play a critical role in consumer decision-making. Their demand curves incorporate the supposition that people make decisions not only based on caloric value but on flavor, packaging, variety, and nutritional content. Through robust regressions the team accurately estimated demand curves. They concluded that price effects and high elasticity influenced demand as well as substitution effects (via cross-price effects). The regression analysis indicates a downward shifting demand curve during the period studied; moreover, the time dummy showed a significant negative effect, reinforcing the Deaton and Drèze case. Their conclusion demonstrated stark contrast in regard to the power of price effects, nonetheless it provided supplementary evidence for the hypothesis they earlier deemed speculation. This paper provides hard evidence for the significance of price effects and acts as a complement to Deaton and Drèze.
Both papers provide transparency to the bizarre phenomenon occurring in India. While I am partial to Deaton and Drèze, I am quite convinced by the thorough work done by Gaiha et al. I was initially taken aback when the second paper considered the declining need for calories pure conjecture; but then I realized my belief in the hypothesis might have been purely out of goodwill. My immediate attachment to the theory could have been wishful thinking on my part: achieving a better standard of living in developing countries is the development economists’ goal after all, right? Admittedly, the attraction to this hypothesis may have been premature; yet, having read the secondary study conducted, I feel more comfortable buying into the theory due to the legitimate proof generated by the time dummy. The price effect theory is still up for debate in my opinion. I consider myself leaning towards its support because Gaiha et al. clearly obtained cleaner, more concise data. To be fully convinced, I would demand more evidence in favor of the price effects. And although the focus was dominated by calories, I found it quite interesting that both groups discovered similar downward trends with proteins and other nutrients. This consistency—paired with the increasing trend for fats that both teams acknowledged—supplies sound evidence for their hypotheses.
Overall, both teams provide convincing theories for this peculiar situation in India. Both teams provide reasonable justifications as to why per capita calorie consumption is lower at a given level of per capita household expenditure. While the theories contradict each other on price effects, it is agreed that time, standard of living, and improved health has diminished the base level caloric necessities in India—at least to some degree.
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