Food expenditure of the poorest deciles: expected vulnerability and counterintuitive indulgence?

Abstract

Key findings from our estimation models show that although the poorest households are vulnerable to income and food price shocks, our results also reveal an anomaly: given an increase in income and in food price, the poorest households seem to indulge in non-essential food expenditure, which is counterintuitive. Being the poorest typically conjures images of needing more food, not more food choices. We explain our findings within an intertwined theoretical underpinning, providing empirical verifications to two landmark hypotheses that bridge the economic-psychological frontier. We merge two relatively recent and nationally representative Malaysian household expenditure and price datasets. Our paper is perhaps the first work examining the poorest among poor households in a developing country from an economic-psychological angle, providing insights for more nuanced policy prescriptions. We believe our findings unveil aspects of food and poverty in Malaysia that have yet to be given detailed treatment so far.