Can caloric needs explain three food consumption puzzles? Evidence from India

We argue that differences in caloric needs can help explain three food consumption puzzles that have been noted in the literature. The first puzzle (Deaton and Dreze (2009)) is the stagnant or declining caloric intake of Indian household despite significant economic growth between 1983-2005. The second puzzle (Deaton and Paxson (1998)) is the negative relationship between household size and caloric intake per capita after controlling for total expenditure per capita, which is inconsistent with basic theories of household scale economies. The third puzzle is the substantial decline in caloric intake for older Indian households which seems to suggest the absence of any consumption-smoothing consistent with the permanent-income life-cycle hypothesis, a decline that is at odds with results for the United States where there is little or no decline. We combine data on household food consumption with a novel measure of caloric needs based on time-use data and anthropometric measures of net nutritional outcomes to shed light on all these puzzles. Our results indicate that caloric needs can explain a substantial part of all three puzzles, and that consequently attempts to use food and caloric intake to measure household welfare – which are very common in the literature using Engel’s law or absolute poverty lines based on caloric intake – need to carefully control for substantial variation in caloric needs across households. When caloric needs vary substantially, lower caloric intake can actually correspond to an increase in welfare as it frees up resources for higher food quality and non-food expenditures. ∗We would like to thank Pierre-Olivier Gourinchas, Chang-Tai Hsieh, Ronald Lee, and Ted Miguel for their comments and suggestions. We also thank Pranab Bardhan, Ethan Ligon, Elizabeth Sadoulet, as well as participants of the Berkeley Development Lunch and Seminar and University of Toronto SWEAT seminar for helpful comments. Lucas Parker provided outstanding research assistance. Nicholas Li gratefully acknowledges financial support from the Social Sciences and Humanities Research Council of Canada, the UC Berkeley Institute for Business and Economics Research, and the Center for Equitable Growth. Shari Eli gratefully acknowledges the financial support of the NICHD grant T32-HD007275 and NIA grant T32-AG000246. All errors are ours. INDIA’S MISSING CALORIES 1