Nutrient Intake of the Poor and its Implications for the Nutritional Effect of Cereal Price Subsidies: Evidence from China

We incorporate habit formation into an analysis of the effect or cereal price changes on the nutrient intake of the poor in China. We find that the poor's nutrient intake responds asymmetrically to declines and increases in cereal prices, and that the asymmetric response of their fat intake may be due to habit formation. Our results also imply that introducing cereal price subsidies can increase their total energy intake by increasing their calorie intake from fat and protein, while ending such subsidies would insignificantly affect their total energy intake, but further increase their calorie intake from fat and protein. (C) 2009 Elsevier Ltd. All rights reserved