Crises, Food Prices, and the Income Elasticity of Micronutrients: Estimates from Indonesia

The 2008 global food price crisis and more recent food price spikes have led to a greater focus on policies and programs to cushion the effects of such shocks on poverty and malnutrition. Analysis of the income elasticities of micronutrients and their changes during food price crises can shed light on the potential effectiveness of cash transfer and nutrition supplement programs. This article examines these issues using data from two cross-sectional household surveys in Indonesia, taken before (1996) and soon after (1999) the 1997–98 economic crisis, which led to a sharp increase in food prices. First, using nonparametric and regression methods, the article examines how the income elasticity of calories from starchy staples as a share of total calories differs between the two survey rounds. Second, the article estimates income elasticities of important nutrients in Indonesia. The analysis finds that, although summary measures such as the income elasticity of the starchy staple ratio might not change during crises, this stability masks important differences across individual nutrients. In particular, income elasticities of some key micronutrients, such as iron, calcium, and vitamin B1, are significantly higher in a crisis year than in a normal year, yet the income elasticities of others—such as vitamin C—remain close to zero. These results suggest that cash transfer programs might be even more effective during crises to ensure the consumption of essential micronutrients. But to ensure that all key micronutrients are consumed, nutrition supplement programs are also likely required.