The expenditure elasticity for food and calories: Evidence from unconditional cash transfers in Kenya

Accurate estimates of food and nutrient elasticities are important inputs for the design of efficient policies targeting the poor. In this paper we estimate the expenditure elasticity of food and calories using exogenous variation in budget from two unconditional cash transfer programs in rural Kenya, combined with detailed data on food expenditure, nutrition and prices. We find an elasticity of food expenditure of 0.86 and of calories of 0.66. Although these estimates are higher than those reported in many previous studies — plausibly because our study focuses on extremely poor households — they are significantly lower than those obtained using a non-experimental analysis in our context.