The Direct and Structure Effect of Income on Nutrition Demand of Chinese Rural Residents

Abstract

Although a significant body of literature has analyzed the effect of income-mediated policies on nutrition, research on how income affect nutrition consumption is scant. This paper contributes to the literature by decomposing the overall income effect on rural residents’ calorie intake into the direct income effect and the structure effect by building a simple theoretical model and conducting related empirical research with an instrumental variable (IV) approach. Using nationally representative data from China, we find that the structure effect of income, represented by fat share growth induced by income, occupies a considerable proportion (38.03%) of overall income effect. Additionally, we provide evidence of an asymmetric distributional effect of income on calorie intake. In particular, the structure effect of income substantially accounts for a larger proportion in the higher quantiles of the calorie intake distribution. Our findings help better evaluate the effectiveness of the income-mediated policies from quantity and structure perspectives in a comprehensive framework.