Nutrition knowledge, rice prices, and the micronutritional effect of Indonesia's crisis of 1997-98

This paper analyzes three related questions pertaining to child micronutrient status in Indonesia: (1) What was the nutritional effect of Indonesia's economic and financial crisis of 1997-98? (2) What are the determinants of child micronutrient status? (3) What is the effect of rice price increases on household purchases of micronutrient-rich foods? Analysis of household survey data from rural Central Java reveals that Indonesia's financial crisis had relatively little effect on child caloric intake. Families tended to maintain their rice consumption in the face of a tripling of the rice price, but often did so by sacrificing their consumption of higher-quality micronutrient-rich foods. As a result, child micronutrient malnutrition (e.g., iron-deficiency anemia) increased substantially even while weight-for-age remained constant. This effect was most pronounced among the youngest cohorts of children at the time of the crisis. More focused analysis of the determinants of child micronutrient status demonstrates that maternal nutrition knowledge is a critical factor. Indeed, specific knowledge of nutrition is more critical than formal schooling as a determinant of child micronutrient status. Other relevant factors include child sex and age, the number of children in the household, household expenditure levels, and access the water. Yet, establishing a reduced-form relationship between maternal nutrition knowledge and child micronutrient outcomes sheds no light on the question of how such knowledge affects outcomes. Understanding the mechanisms through which nutrition knowledge works requies a more structural approach. A production function for child micronutrient status must include intake of micronutrient-rich foods. Yet, underlying such a specification must also be a demand function for micronutrient-rich foods. Thus, one possible way to understand the mechanisms through which maternal nutrition knowledge affects child micronutrient outcomes is to include nutrition knowledge as an argument in the demand function for micronutrient-rich foods. What is the effect of nutrition knowledge on household budget allocation between food and nonfood, and among foods, between starchy staples and micronutrient-rich foods? Preliminary evidence suggests that households of mothers with nutrition knowledge allocate substantially greater budget shares to micronutrient-rich foods and smaller budget shares to rice. The cross-price elasticity between micronutrient consumption and the rice price is key, particularly in the Indonesian crisis context in which the baseline rate of child anemia was high and rice prices increases rapidly. Preliminary evidence suggests that the micronutrient consumption of households with nutrition knowledge is substantially less sensitive to changes in rice prices than that of households lacking in nutrition knowledge. This may have been a critical factor in determining the severity with which Indonesia's crisis affected the nutritional welfare of some households relative to others.