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Calories, prices and incomes by Raghav Gaiha, Raghbendra Jha and Vani S Kulkarni


Various recent studies point to a puzzle. Despite rising incomes, there has been a sustained decline in per capita calorie intake. In an important contribution , A Deaton and J Dreze (‘ Food and Nutrition in India: Facts and Interpretations’ , Economic and Political Weekly, XLIV (7), 2009) offer a detailed analysis of the decline in calorie intake in 1983-2004 .

Average calorie consumption was about 10% lower in rural areas in 2004-05 than in 1983. The proportionate decline was larger among the more affluent sections of the population . In urban areas, there was a slight change in average calorie intake over this period.

The decline of per capita consumption is not confined to calories. It also applies to proteins and other nutrients, with the exception of fats whose consumption increased.

As incomes rose over this period, these declines are puzzling. A more contentious view offered by these economists is that the latter are not attributable to changes in relative prices as an aggregate measure of the price of food — treated synonymous with the price of calories —changed little during the period in question.

So the puzzle is essentially this: per capita calorie consumption is lower at a given level of per capita household expenditure, across the expenditure scale, at low levels of per capita expenditure as well as high. In other words, there is a steady downward shift of the calorie Engel curve (in which calories are plotted against per capita expenditure).

They are emphatic that the downward shift of this curve is due to lower calorie requirements , associated mainly with better health and lower activity levels. As the evidence offered is fragmentary and patchy, this explanation is largely conjectural.

Our study (Gaiha R, R Jha and Vani S Kulkarni , 2010, ‘Demand for Nutrients in India, 1993-2004 ’, Canberra: Australia South Asia Research Centre, Australian National University , mimeo) throws more light on the decline in calorie intake and the explanation offered but over a shorter period (i.e. 1993-2004 ).

Our explanation is embedded in a standard demand theory framework, with food prices and monthly per capita expenditure (in 2004 prices) cast in a pivotal role. A presumption is that people make informed food choices, based on flavour, packaging, variety and, of course, nutritional content.

In that case, it is meaningful to talk about calorie, protein and other nutrient demand functions . Food prices influence choice of commodities directly through own-price effects as well as through substitutions induced by cross-price effects.

Controlling for these effects, expenditure (as a proxy for income) generally has a positive effect on the demand for a food commodity unless it is an inferior good. Our analysis also allows for changes in food demand elasticities with respect to prices and expenditure (i.e. proportionate change in food demand /proportionate change in its price) over time.

Finally, we are able to capture the combined effect of changes such as health improvements and less strenuous activity patterns over time, among others.


So when we refer to changes in calorie demand, these subsume changes in consumption of food commodities due to changes in their prices, expenditure and other (unrelated) factors.

Our analysis shows significant negative price effects of cereals such as rice and wheat on calorie demand. These effects, however, weakened during 1993-2004 . Prices of vegetables also affected calorie demand negatively but the effect was larger (in absolute value) over time. So the important point is that higher the food prices lower the calorie demand.

Expenditure had a large positive effect on calorie demand —-a 1% increase in per capita expenditure results in a 0.39% increase in calorie demand. Besides, other factors (health improvements, and less strenuous activity patterns, among others) contributed substantially to reduction in calorie demand, as conjectured by Deaton and Dreze (2009).

So, while this conjecture is not rejected, it is complementary to our demand-based explanation. During 1993-2004 , while per capita expenditure stagnated, food prices rose sharply (e.g. cereal prices by about 58%, and vegetables’ prices by close to 100%).
Juxtaposing these facts with the food price and expenditure elasticities, it follows that while stagnation of expenditure left calorie demand unchanged , higher food prices reduced it. Lower calorie requirements for reasons stated earlier also contributed to a lower intake but in combination with a lower demand.

Does it really matter why calorie intake fell? In our view, it does, as the policy implications differ vastly. The case for interventions designed to stabilise food prices and expand livelihood opportunities in rural areas is reinforced despite a deafening but misguided chorus that nutritional deprivation is exaggerated or does not matter much.

(Raghav Gaiha is at MIT/University of Delhi, Raghbendra Jha is at Australian National University, and Vani S Kulkarni is at Yale University)