Presentation/s:

Asian governments intervene in the world rice market to protect domestic consumers. Whether consumers are nutritionally vulnerable depends on the elasticity of calories with respect to rice prices. Common demand models applied to household survey and market price data ignore quality substitution and force all adjustment onto the quantity (calorie) margin. This paper uses data from Vietnam on market prices, food quantity and quality. A ten percent increase in the relative price of rice reduces household calorie consumption by less than two percent but this elasticity would be wrongly estimated to be more than twice as large if quality substitution is ignored.

John Gibson is a Professor in the Department of Economics, University of Waikato and a Senior Research Associate of Motu Economic and PublicPolicy Research. He taught previously at the University of Canterbury, and the Economics Department and Center for Development Economist at Williams College. Since receiving his Ph.D. from Stanford University he has worked in Cambodia, China, Fiji, Papua New Guinea, Russia, Samoa, Solomon Islands, Thailand, Timor Leste, Tonga, Vanuatu, and Vietnam. His recent publications have appeared in the Review of Economics and Statistics, Journal of the European Economic Association, Journal of Development Economics, Journal of Environmental Economics and Management, and Journal of Health Economics.

>> view paper