The Variety Engel Curve in China: Welfare Gains from Dietary Diversity Amid Economic Shocks

Abstract: 

“This study analyzes the patterns, sources, and welfare implications of differences in food consumption diversity amidst the backdrop of China’s economic growth from 1995 to 2015. Using rich, widely available panel data on food expenditures, we implement an Engel curve approach that incorporates endogenous variety choice. Our analysis reveals a 12% increase in the number of food varieties consumed, which corresponds to a 20% welfare gain. Our decompositional analysis indicates that, in contrast to the benefits of marginal varieties and the costs of accessing them, household expenditure is the primary driver of variety differences. This finding stands in contrast to a seminal study using data from India. Furthermore, we employ a causal inference framework to examine the welfare implications of two epochal events that precipitated significant shifts in the variety Engel curve: China’s accession to the WTO and the 2008 global financial crisis.”

The seminar is based on this paper. Find Jiong Zhu's CV here.