With the Help of One's Neighbors : Externalities in the Production of Nutrition in Peru

Public and private investments in education and infrastructure (such as water and sanitation infrastructure) for one household carry over to neighboring households. Shared knowledge has a significant impact on children's nutrition in rural areas. There is a direct link between the caregivers' education and their children's health status and an additional impact from living near neighbors with more education. Both public and private resources contribute to children's nutritional status. And investments by one household may improve health in other neighborhood households by improving the sanitation environment and increasing shared knowledge.Alderman, Hentschel, and Sabates measure the externalities of investments in nutrition by indicating the impact of women's education in Peruvian neighborhoods on children's nutrition in other households, after controlling for those households' education and income. They find that in rural areas this shared knowledge has a significant impact on nutrition. The coefficient of an increase in the average education in the neighborhood is appreciably larger than the coefficient of education in isolation. That is, educating women in rural areas improves all children's nutritional status even for those whose caregivers are themselves not educated.In both urban and rural areas, they observe externalities from investments in sanitation made by neighboring households. They do not find the same externalities in the case of investments only in the household water supply.There is a direct link between the caregivers' education and their children's health status. Education transmits information about health and nutrition. It teaches numeracy and literacy, which help caregivers read labels and instructions. By exposing caregivers to new environments, it makes then receptive to modern medical treatment. It gives women the confidence to participate in decisionmaking within a household, and it gives men and women the confidence to interact with health care professionals.This paper - a joint product of Poverty, Development Research Group and the Poverty Division, Poverty Reduction and Economic Management Network - is part of a larger effort in the Bank to better understand the impact of public services