IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/56080.html
   My bibliography  Save this paper

Food Price Heterogeneity and Income Inequality in Malawi: Is Inequality Underestimated?

Author

Listed:
  • Mussa, Richard

Abstract

The paper uses data from the Second and the Third Integrated Household Surveys to examine whether the poor pay more for food in Malawi, and the consequences of the poverty penalty on inequality measurement. The results show that regardless of location and year, poor households pay more for food compared to nonpoor households. It is found that measured inequality based on a new consumption aggregate is much higher than official inequality figures. The paper also finds that nominal inequality underestimates "real" inequality, with the underestimation ranging from 3.9% to 7.1% for the Gini coefficient, 8.4% to 16.2% for the Thiel L, and 0.11% to 24.5% for the Thiel T. The paper therefore finds that official inequality figures understate the inequality problem in Malawi. The high inequality levels may partly explain the puzzle of high economic growth which has led to marginal poverty reduction in Malawi as these high levels of inequality could be impeding the poverty reducing effect of economic growth.

Suggested Citation

  • Mussa, Richard, 2014. "Food Price Heterogeneity and Income Inequality in Malawi: Is Inequality Underestimated?," MPRA Paper 56080, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:56080
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/56080/1/MPRA_paper_56080.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. repec:bla:revinw:v:46:y:2000:i:2:p:201-11 is not listed on IDEAS
    2. Christophe Muller, 2008. "The Measurement Of Poverty With Geographical And Intertemporal Price Dispersion: Evidence From Rwanda," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(1), pages 27-49, March.
    3. Muller, Christophe, 2002. "Prices and living standards: evidence for Rwanda," Journal of Development Economics, Elsevier, vol. 68(1), pages 187-203, June.
    4. Gibson, John & Kim, Bonggeun, 2013. "Do the urban poor face higher food prices? Evidence from Vietnam," Food Policy, Elsevier, vol. 41(C), pages 193-203.
    5. Jean-Yves Duclos & Abdelkrim Araar, 2006. "Poverty and Equity," Economic Studies in Inequality, Social Exclusion, and Well-Being, Springer, number 978-0-387-33318-2, July.
    6. Deaton, Angus, 1988. "Quality, Quantity, and Spatial Variation of Price," American Economic Review, American Economic Association, vol. 78(3), pages 418-430, June.
    7. Wagstaff, Adam & van Doorslaer, Eddy & Watanabe, Naoko, 2003. "On decomposing the causes of health sector inequalities with an application to malnutrition inequalities in Vietnam," Journal of Econometrics, Elsevier, vol. 112(1), pages 207-223, January.
    8. Eddy van Doorslaer & Xander Koolman, 2004. "Explaining the differences in income‐related health inequalities across European countries," Health Economics, John Wiley & Sons, Ltd., vol. 13(7), pages 609-628, July.
    9. World Bank, 2007. "Malawi - Poverty and Vulnerability Assessment : Investing in Our Future," World Bank Publications - Reports 7909, The World Bank Group.
    10. World Bank, 2013. "Malawi Public Expenditure Review," World Bank Publications - Reports 20586, The World Bank Group.
    11. Owen O'Donnell & Eddy van Doorslaer & Ravi P. Rannan-Eliya & Aparnaa Somanathan & Shiva Raj Adhikari & Deni Harbianto & Charu C. Garg & Piya Hanvoravongchai & Mohammed N. Huq & Anup Karan & Gabriel M., 2007. "The Incidence of Public Spending on Healthcare: Comparative Evidence from Asia," The World Bank Economic Review, World Bank, vol. 21(1), pages 93-123.
    12. Dorward, Andrew & Chirwa, Ephraim & Kelly, Valerie A. & Jayne, Thomas S. & Slater, Rachel & Boughton, Duncan, 2008. "Evaluation Of The 2006/7 Agricultural Input Subsidy Programme, Malawi. Final Report," Food Security Collaborative Working Papers 97143, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    13. Timothy K.M. Beatty, 2010. "Do the Poor Pay More for Food?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(3), pages 608-621.
    14. Gunther, Isabel & Grimm, Michael, 2007. "Measuring pro-poor growth when relative prices shift," Journal of Development Economics, Elsevier, vol. 82(1), pages 245-256, January.
    15. World Bank, 2007. "Malawi Poverty and Vulnerability Assessment : Investing in Our Future, Synthesis Report," World Bank Publications - Reports 7557, The World Bank Group.
    16. World Bank, 2007. "Malawi : Poverty and Vulnerability Assessment, Investing in Our Future," World Bank Publications - Reports 7555, The World Bank Group.
    17. Ravallion, Martin, 2001. "Growth, Inequality and Poverty: Looking Beyond Averages," World Development, Elsevier, vol. 29(11), pages 1803-1815, November.
    18. repec:dau:papers:123456789/4381 is not listed on IDEAS
    19. Ronald U. Mendoza, 2011. "Why do the poor pay more? Exploring the poverty penalty concept," Journal of International Development, John Wiley & Sons, Ltd., vol. 23(1), pages 1-28, January.
    20. Vijayendra Rao, 2000. "Price Heterogeneity And “Real” Inequality: A Case Study Of Prices And Poverty In Rural South India," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(2), pages 201-211, June.
    21. Xander Koolman & Eddy van Doorslaer, 2004. "On the interpretation of a concentration index of inequality," Health Economics, John Wiley & Sons, Ltd., vol. 13(7), pages 649-656, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. UNDP Regional Bureau for Africa & Bruno Martorano & Giovanni Andrea Cornia, "undated". "Building an Integrated Inequality Dataset and the Seven Sins of Inequality Measurement in sub-Saharan Africa," UNDP Africa Policy Notes 2017-16, United Nations Development Programme, Regional Bureau for Africa.
    2. Mussa, Richard, 2017. "Poverty and Inequality in Malawi: Trends, Prospects, and Policy Simulations," MPRA Paper 75979, University Library of Munich, Germany.
    3. repec:rac:ecchap:2017-16 is not listed on IDEAS
    4. Cornia, Giovanni Andrea & Martorano, Bruno, 2017. "Income Inequality Trends in sub-Saharan Africa: Divergence, determinants and consequences: Building an Integrated Inequality Dataset and the ‘Seven Sins’ of Inequality Measurement in Sub-Saharan Afric," UNDP Africa Reports 267776, United Nations Development Programme (UNDP).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Richard Mussa, 2015. "Do the Poor Pay More for Maize in Malawi?," Journal of International Development, John Wiley & Sons, Ltd., vol. 27(4), pages 546-563, 05-27.
    2. Gibson, John & Kim, Bonggeun, 2013. "Do the urban poor face higher food prices? Evidence from Vietnam," Food Policy, Elsevier, vol. 41(C), pages 193-203.
    3. Christophe Muller, 2022. "Poverty Measurement under Income and Price Dispersions," AMSE Working Papers 2204, Aix-Marseille School of Economics, France.
    4. Christophe Muller, 2022. "Poverty Measurement under Income and Price Dispersions," Working Papers hal-03612841, HAL.
    5. Christophe Muller, 2023. "Poverty measurement under income and price dispersion," Chapters, in: Jacques Silber (ed.), Research Handbook on Measuring Poverty and Deprivation, chapter 14, pages 151-160, Edward Elgar Publishing.
    6. Peterman, Amber & Behrman, Julia & Quisumbing, Agnes, 2010. "A review of empirical evidence on gender differences in nonland agricultural inputs, technology, and services in developing countries," IFPRI discussion papers 975, International Food Policy Research Institute (IFPRI).
    7. Christophe Muller & Nouréini Sayouti, 2021. "How does information on minimum and maximum food prices affect measured monetary poverty? Evidence from Niger," AMSE Working Papers 2102, Aix-Marseille School of Economics, France, revised Oct 2021.
    8. Ecker, Olivier & Qaim, Matin, 2011. "Analyzing Nutritional Impacts of Policies: An Empirical Study for Malawi," World Development, Elsevier, vol. 39(3), pages 412-428, March.
    9. Nouréini Sayouti & Christophe Muller, 2021. "How does information on minimum and maximum food prices affect measured monetary poverty ? Evidence from Niger," CERDI Working papers hal-03117686, HAL.
    10. John Gibson & Bonggeun Kim, 2018. "Economies of scale, bulk discounts, and liquidity constraints: comparing unit value and transaction level evidence in a poor country," Review of Economics of the Household, Springer, vol. 16(1), pages 21-39, March.
    11. Ulrik Beck, 2015. "Keep it real: Measuring real inequality using survey data from developing countries," WIDER Working Paper Series wp-2015-133, World Institute for Development Economic Research (UNU-WIDER).
    12. Fleurbaey, Marc & Schokkaert, Erik, 2009. "Unfair inequalities in health and health care," Journal of Health Economics, Elsevier, vol. 28(1), pages 73-90, January.
    13. Wood, Benjamin & Nelson, Carl H. & Kilic, Talip & Murray, Siobhan, 2012. "Up in Smoke?: Agricultural Commercialization,Rising Food Prices and Stunting in Malawi," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 131261, International Association of Agricultural Economists.
    14. Cook, Aaron M. & Ricker-Gilbert, Jacob E. & Sesmero, Juan P., 2013. "How do African households adapt to climate change? Evidence from Malawi," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150507, Agricultural and Applied Economics Association.
    15. Gaddis,Isis, 2016. "Prices for poverty analysis in Africa," Policy Research Working Paper Series 7652, The World Bank.
    16. Christophe Muller, 2008. "The Measurement Of Poverty With Geographical And Intertemporal Price Dispersion: Evidence From Rwanda," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(1), pages 27-49, March.
    17. Ragasa, Catherine, 2012. "Gender and Institutional Dimensions of Agricultural Technology Adoption: A Review of Literature and Synthesis of 35 Case Studies," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126747, International Association of Agricultural Economists.
    18. Eddy van Doorslaer & Owen O'Donnell, 2008. "Measurement and Explanation of Inequality in Health and Health Care in Low-Income Settings," WIDER Working Paper Series DP2008-04, World Institute for Development Economic Research (UNU-WIDER).
    19. Brian Chin, 2010. "Income, health, and well-being in rural Malawi," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 23(35), pages 997-1030.
    20. R. Wendy Karamba & Paul C. Winters, 2015. "Gender and agricultural productivity: implications of the Farm Input Subsidy Program in Malawi," Agricultural Economics, International Association of Agricultural Economists, vol. 46(3), pages 357-374, May.

    More about this item

    Keywords

    poverty penalty; inequality; Malawi;
    All these keywords.

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • D30 - Microeconomics - - Distribution - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:56080. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.