Subsidized Food Distribution with Variable Service Quality : A Revealed Preference Approach

This paper considers quality control in a program that distributes subsidized food. The standard theory of price controls and participatory approaches to food security both suggest that the quality of subsidized food and distribution services may be lower in vulnerable communities. We examine this suggestion in the context of a self-targeted rice subsidy program run by the Philippines National Food Authority (NFA) in 2006. We find that even though NFA rice is demanded more by poorer, less educated and more rice-dependent households, observationally equivalent households in poorer, less educated and more rice-dependent local markets had lower demand for NFA rice. This suggests that needier and less empowered locations received lower quality service. Moreover, we find that these more vulnerable, lower-demand locations were also badly served by several other public services, suggesting that they lack “voice”. These results highlight an important consideration in the debate on whether food security programs should distribute food or cash. The quality of cash distribution services should be easier to control