Poverty = Hunger?

Generally, when people discuss poverty, hunger enters the conversation–it’s natural to think that if people are poor they are likely struggling to adequately meet their nutritional needs. However, through research and experiments, what scientists and economists have found is that most people, even the extremely poor, can afford to purchase enough calories to live and be productive. If this is the case, why are there still people who aren’t getting enough to eat? The answer, of course, is complex and multifaceted.

In their text Poor Economics, Abhijit Banergee and Esther Duflo examine how foreign aid policy has failed due to deep misunderstandings about poverty, and call for more careful planning and greater reliance on scientific evidence to steer policy decisions aimed at eradicating poverty. A portion of Poor Economics focuses on dis/proving the nutrition-based poverty trap, the idea that “there exists a critical level of nutrition, above or below which dynamic forces push people either further down into poverty and hunger or further up into better-paying jobs and higher-calorie diets.” They turned to places like India, where in 2004 only 2% of people surveyed stated they did not have enough to eat (that’s down from 17% in 1983), the Philippines, China and Morocco to research, among other objectives, the effects of food subsidies and determine how much of a person’s income is spent on food. Their research turned up some startling results.

“…if calories are the main driver of poverty, then we should expect people to spend every extra cent on the cheapest calories. What we see instead is people opting to consume tastier, more expensive food when they get the chance.” –Poor Economics

In the Philippines, a person can consume 2,400 calories a day for 21 cents PPP, but they would be limited to consuming mainly bananas and eggs. Despite this available access to calories, the poor tend not to purchase the quality food that would benefit them calorically and food aid programs generally emphasize quantity over quality.

While in Morocco, Esther and her research partners found that in some of the very poor villages they visited, people had cell phones, televisions, and even DVD players, but survived off of a very modest diet (leaving some unable to work due to insufficient calories). Any extra income people had tended not to go towards obtaining better quality, calorie rich food; instead, extra income was saved for small luxuries or, if food was acquired, better tasting food, not food that was actually better for a person to improve their work capacity. Though it may be obvious that the benefits of a nutritious diet are significant, for some, the need to momentarily escape the doldrums of poverty through entertainment outweighs the need for a nutrition upgrade.

Of the research shared in Poor Economics, what I found most fascinating was an experiment conducted in China seeking to analyze the impact of food subsidies on food purchasing decisions. This experiment was conducted by two economists, Robert Jensen and Nolan Miller, who were in search of an ever-elusive Giffen good–a good that people consume more of as the price increases, thus violating the Law of Demand.

Jensen and Miller found that rice (and wheat, though I’ll only address the former for the sake of brevity) in China fit the parameters for a Giffen good and decided to test their hypothesis by providing a random selection of families in the southern province of Hunan a six-month subsidy for rice. They collected data on family purchases during the subsidy period and afterward. In the end, the results found that when rice was subsidized, families actually bought less of it and instead used the extra income to purchase more expensive foods, mainly purchasing more meat and shrimp. These families were actually consuming less calories when their food was subsidized. When the subsidy period was over and the price of rice increased, families purchased more rice and thus violated the Law of Demand, proving rice to indeed be in this instance a Giffen good.

The important point this particular example illustrates is that food subsidies and food aid policy don’t always have the intended or expected outcome and can, in fact, result in the populations most in need making decisions that are counterproductive. Current food aid policy requires some rethinking. Not only is there a ton of money, and food, being wasted in the way food aid is currently being handled, but it’s also not as effective as other means of helping those in poverty. Esther Duflo cites two different programs with promising results–in Colombia school lunches are being sprinkled with micronutrient packets and deworming programs at schools in Kenya are not only improving the health condition of children, but also helping to improve their future income by keeping children in school for longer.

I’ll leave you with this:

“If we don’t know whether aid is doing any good, we are not any better than the medieval doctors and their leeches.” -Esther Duflo

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