File2-page200 - Poverty and Undernutrition (ii)...

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Poverty and Undernutrition (ii) substitution between food groups (meat, dairy products or fats in place of cereals). Price per unit calorie is thus an increasing function of income. Elasticity of calories therefore lies below the elasticity of food. Substitution towards higher priced calories drives a wedge between food elasticity and calorie elasticity. The size of this wedge depends on house- hold preferences for quality and variety at the margin. Expect the switch to expensive foods to be more pronounced at high levels of per-capita ex- penditure. Calorie-expenditure elasticity will therefore tend to decline to- wards zero as expenditure rises. Whether the elasticity is as low as 0.10 (or even 0.0) at low intakes is what is in dispute. Estimates range from around 0.5 on the one hand to near zero on the other. One problem: Elasticity evaluated at mean as opposed to in the lower end of distribution. However, controversy is over the size of the calorie response in poor households. Benchmark
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This note was uploaded on 12/29/2011 for the course ECO 307 taught by Professor Dublin during the Spring '10 term at SUNY Stony Brook.

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