The Impact of the 2005–2010 Rice Price Increase on Consumption in Rural Bangladesh

Hasan, Syed (2016) The impact of the 2005-10 rice price increase on consumption in rural Bangladesh, Agricultural Economics, 47(4), pp 423-433

Posted: 28 Feb 2017

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Syed Hasan

Massey University - School of Economics and Finance

Date Written: June 1, 2016

Abstract

This article studies the impact of the rice price increase between 2005 and 2010 on consumption in rural Bangladesh. Using the Household Income and Expenditure Survey (HIES) data, we compare net rice buyers and sellers to self-sufficient households. To identify the effect of rice price changes on household consumption of rice, nonrice food and nonfood items, we employ a difference-in-differences (DiD) technique. Our findings indicate that the surge in domestic rice prices between 2005 and 2010 reduced the nonrice food consumption of net rice buyer households by 7%, compared to the households who are self-sufficient in rice production. However, it did neither affect their rice nor their nonfood consumption. In contrast, while we find no significant effect of rice price increases on the rice consumption of net rice sellers, we observe a 9% increase in their nonrice food consumption. In such situation, a subsidy on low-quality rice may be effective in fulfilling the nutritional requirement of low-income households.

Keywords: Rice price increase; Difference-in-difference estimation; Food consumption; Bangladesh

JEL Classification: D12, I32, O13, O53, Q12

Suggested Citation

Hasan, Syed, The Impact of the 2005–2010 Rice Price Increase on Consumption in Rural Bangladesh (June 1, 2016). Hasan, Syed (2016) The impact of the 2005-10 rice price increase on consumption in rural Bangladesh, Agricultural Economics, 47(4), pp 423-433, Available at SSRN: https://ssrn.com/abstract=2924422

Syed Hasan (Contact Author)

Massey University - School of Economics and Finance ( email )

Private Bag 11-222
Palmerston North, 30974
New Zealand

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