In-kind transfers and household food consumption: implications for targeted food programs in Bangladesh
2002
C. del Ninno | P.A. Dorosh
This paper examines the impact of wheat transfers and cash incomes on wheat consumption and wheat markets. It uses data from a 1998/99 survey of rural households in Bangladesh to econometrically estimate marginal propensities to consume (MPCs) out of wheat transfers in several distribution programs. The resulting MPCs are then used to calculate the potential impacts of these programs on household wheat consumption and wheat market prices.Findings include:using propensity score-matching techniques, the total marginal propensity to consume (MPC) for wheat is, on average, 0.33, ranging from essentially zero for Food For Work (a program with large transfers) to 0.51 for Food For Educationeconometric estimates indicate that the MPC for small wheat transfers to poor households is approximately 0.25, while the MPC for wheat out of cash income is near zerothis increase in demand for wheat reduces the potential price effect of three major targeted programs involving small rations by about one-thirdthe potential impact of these wheat transfer programs on market prices (when prices are below import parity) is approximately only two-thirds the magnitude of the impact of cash transfer programs (and a release of the same amount of wheat in the market)the demand-enhancing effect of direct distribution in small rations does not necessarily imply that targeted direct distribution programs are preferable to other programs or open market sales, since other factors, including cost of delivery, efficiency of targeting and policy objectives, are also important determinants of policy choice[adapted from author]
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