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JEREMY:
Hello and welcome to another episode of Eat This Podcast with me,
Jeremy Cherfas.

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Last time we heard about the 3 billion people worldwide who cannot
afford a healthy, nutritious diet.

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In this episode, a question that wasn't really relevant last time.

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When people do have more money, what kind of food do they actually
buy?

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There's a lot of historical interest in this idea, going back at
least to the middle of the 19th century.

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That's when Ernst Engels, a German statistician, published his
discovery that as income goes up, the proportion spent

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on food goes down, even though the total amount spent on food goes
up.

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That's now known as Engels Law, and an extension of Engels Law is
called Bennett's Law, formulated by the American

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agricultural economist Merrill Bennett in 1941.

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MARC:
Bennett's law is is the empirical regularity that says that as people
go from very poor to less poor, they substitute away from coarse

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grains towards finer grains, so away from sorghum and millet and
grains that are just filling, but not necessarily the tastiest,

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towards stuff like wheat, rice and corn.

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And as they go from merely poor to perhaps middle income or non-poor,
they substitute away from carbohydrates altogether and start bringing

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in more protein, usually in the form of animal sourced foods.

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JEREMY:
That's Mark Bellamere, also an agricultural economist and a frequent
guest on this podcast.

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And did you catch what he said?

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That Bennett's law is not so much a law as an empirical regularity.

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What he means is that nobody had actually gone and accurately
measured the kinds of foods that people buy when they have more money

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to spend, just that they notice that they do seem to switch from
coarse grains to fine, and then from fine grains to protein.

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And of course, the reason I'm talking to Marc Bellemare about this now
is that he and his colleagues have just published a paper in which

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they do actually measure what kinds of foods poor people buy when
they have more to spend.

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It is, he says, the first credible test of Bennett's law.

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The point here is not that Bennett's law might be wrong.

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In fact, it's what you might expect.

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But nobody had actually looked in detail.

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MARC:
On the basis of a handful of assumptions.

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Micro-theory will tell you that as income goes up, the demand for
food goes up.

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So where we started from was, that is theory.

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What do we see empirically?

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Is that really true empirically?

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And can we get an answer to that question of what is the income
elasticity of food demand?

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Because that's a very thorny issue, as you may know.

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And if you ...

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JEREMY:
Let me just stop you for a minute there, because I understand price
elasticity of demand.

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What is income elasticity of demand?

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MARC:
The income elasticity of demand measures what happens to quantity
demanded in percentage terms for a 1% increase in income.

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What's great about an elasticity measure, elasticity is a unit free
unit of measurement.

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It tells you for a 1% change in something, how does the other thing
respond in percentage terms.

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So it is -- whether you measure it in dollars, in euros in kwacha --
you get a measure that you can compare across contexts.

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And this is where we kind of come in with this paper because ...

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So we looked at what micro-theory says, we looked at what the
empirical evidence so far said, and we asked ourselves, how can we do

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better? And it's fairly easy to do better.

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First off, you know, I take theory seriously, but I don't take it as
gospel, meaning that economic theory is often wrong in specific

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contexts. It'll tell you one thing, and then you look at the data,
you get the best estimate you can get, and you find something that is

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not in line with theory necessarily.

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But more worryingly for us, is the fact that many of the estimates
you see in the literature that are bandied about by policy makers,

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some researchers, are just poorly identified, meaning that they are
not necessarily an accurate number.

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And that is especially true when it comes to income elasticity of
demand.

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That is something that I've taught.

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I think in most undergraduate courses I have ever taught, we don't
really have a good sense of what happens to food demand when income

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goes up. The reason being the first thing is demand for what?

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Because you can measure the demand for food in several different
ways.

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The most standard way that people think about would be perhaps in
terms of calories, right?

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What we do in the paper is we look at food expenditures, because that
is something that we can harmonize across contexts, and it is fairly

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accurately measurable.

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You know, I'm not saying that calories are not accurately measurable,
but they're often based on imputations that are very old and that are

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dating to kind of a time when the calorie content of various foods
was very different from what we have today.

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And so you can measure it in dollars or expenditures, you can measure
it in calories.

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You can say we will measure it in terms of macronutrients.

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How many grams of protein, how many grams of carbohydrates do people
consume?

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You can measure it in terms of micronutrients.

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You can say, well, what is the demand for vitamin A, vitamin D?

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And because we have so many different measurements of what food
demand is, we have a construct validity issue, right?

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So me talking about food demand may not be the same thing as an FAO
colleague talking about food demand or a nutritionist talking about

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food demand. We needed something that could be compared across
contexts.

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And so we settled on food expenditures, which is by no means a
perfect measure, but it is the measure that we have.

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It is something that is measurable in monetary terms.

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And then the way we got to writing this paper was, I recall having a
conversation with Eeshani Kandpal, my co-author, one of my co-authors

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on this. The other is Katherina Thomas.

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And I remember telling her, I'm very interested in Bennett's Law
because, you know, the name notwithstanding, it wasn't really a law up

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until our paper.

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Bennett's Law was more like, you know, something that we kind of
observe in cross-sectional and time series data, but we don't really

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have an iron-clad estimate for.

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And so I recall an early conversation with Eeshani and saying, well,
what could we work on together?

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And I said, well, we should do a randomized control trial where we
test Bennett's Law.

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And Eeshani, who is infinitely smarter than I am, said, wait a
second.

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We don't have to spend any money doing this.

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There are publicly available data sets of cash transfer, randomized
controlled trials.

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So randomized trials where ...

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Be selected to receive an infusion of cash regularly should you meet
some conditions.

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And that kind of gives us internal validity.

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That is what allows us to make a causal statement there.

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And what's very interesting about that is that we have five RCTs of
conditional cash transfers in four different countries.

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So we have two in Mexico.

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We have one in the Philippines, one in Uganda, and the last one is in
Nicaragua.

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JEREMY:
Okay. So you've got these ...

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Effectively they're government programs usually where some people get
a cash handout and other people ...

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I don't know whether they're actually randomized.

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You say they're randomized controlled trials, but there's a group of
people who get the cash and a group of people who don't, and you can

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look at their expenditures.

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So what is the income elasticity of demand for food purchases?

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MARC:
Well, it's positive.

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So in line with your intuition, as poor people get money and this is
money that's given to them kind of in a random

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fashion, they can they take some of it and spend it on food.

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In other words, demand for food goes up.

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The interesting news is that it's not as much as people expected.

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Our estimates are lower than what the literature had hitherto
presented.

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And that is an interesting fact.

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Or, that's an interesting result, because honestly, I was of the
school of thought that, you know, you're going to see them very much

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an economist in that sense, but I was of the school of thought that
income fixes everything.

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Money is the, you know, is the answer to a lot of problems.

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And so I thought, well, if we just give people more income, right, if
as incomes go up, as the development process takes place, all of those

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nutrition issues are going to get resolved because people are just
going to start upgrading what they consume, and they're going to be,

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you know, they're going to be better nourished.

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We're going to see fewer hungry people.

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So our income elasticity estimates are not as high as what most
people kind of would have speculated up to now.

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And that was kind of a very sobering fact because it ...

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You know, sometimes you find a result that really changes how you view
how the world works.

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And that is one of them.

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That is one of those things where I, you know, it hasn't happened
frequently in the course of my research that I had a finding where I

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thought, this is entirely ...

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It's not entirely different, right?

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If it were entirely different, I would have found that giving people
more money means that they spend less money on food.

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That is not what we find, but we find that they don't spend as much
as what we expect.

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And thus the whole kind of income as solution to so many problems
does not hold.

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JEREMY:
Just to go back.

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You said that elasticity is great because it tells you how much does
spending go up for a 1% increase in income.

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And naively, you might think 1% increase in income, 1% increase in in
spending on food.

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So how much do they increase their spending on food.

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MARC:
Yeah. So so what we do is we find an income elasticity for overall
food expenditures of 0.03.

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It's about three cents on the dollar.

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JEREMY:
That's really not very ...

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MARC:
It is really not very much, exactly right.

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It is way less than you would expect.

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I mean, I would not expect a 1 to 1.

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I would not expect a one dollar on the dollar because we know that
food is a necessity, which means or we know, we know from theory --

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again, see, I'm taking theory a little bit too seriously -- what we
know from theory is that food ought to be a necessity, meaning that

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the income elasticity of food ought to be less than one, for food
overall.

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That is, for luxury goods, for stuff like caviar, we would expect the
elasticity to be greater than one, because those are luxury goods or

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they're deemed to be luxury goods.

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But for food overall, we would expect it to be between 0 and 1, and
we certainly find between 0 and 1, but we find it much closer to zero

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than than I expected going into this project.

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JEREMY:
And it's also ...

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I mean, I have ...

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My expectation would be that it would be higher, especially because
very often cash transfers are targeted at women because they're

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kind of responsible for feeding the family, and they're often
accompanied by education on nutritional questions.

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So maybe that targeting is not necessary either.

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MARC:
That is something we can't quite get into, right?

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We can't speak to the targeting of those cash transfers.

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What we have is this exogenous variation in who gets cash and who
doesn't.

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I would like to clarify, too, that this is an intent to treat
estimate, meaning that when we give people money, we can't force them

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to take it up and do stuff with it, right?

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So this is, we intend to treat those people or the people who ran
those randomized control trials in the first place intended to treat

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the people who receive the cash.

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What they do with it is entirely up to them.

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So it's what we call in the literature an ITT estimate.

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That being said, Jeremy, I want to go back a step.

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What we find is, yes, overall for food, we find that it's 0.03.

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So three cents on the dollar.

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But of course staples, right, stuff again going back to like my
definition of coarse versus fine stuff like sorghum and millet exhibit

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the most inelastic demand.

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And their estimated income elasticity is not statistically different
from zero, meaning that for a change in income, we don't see people

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changing in a statistically meaningful fashion their expenditures on
course staples.

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What has the highest -- which is in line with so many reports and so
much of the conventional wisdom in this kind of economics

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of food demand and nutrition literature -- is that the most elastic
demand is animal sourced protein.

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And so in that sense, we do find stuff that's in line with people's
expectations of, yes, as people get these kind of as people get these

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random infusions of -- random across people, not over time -- they
they will spend, you know ...

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The demand of food, sorry, the category of food that responds most to
this influx of cash is animal source protein.

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JEREMY:
So that's getting to Bennett's law or Bennett's Observational
Regularity.

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MARC:
Correct? Yeah.

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JEREMY:
Can can you can you actually do the three steps, of course to fine
staples and fine staples to meat?

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MARC:
So you got us there.

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So, I am very, very happy to report that yes, we can get to those
three steps.

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What I'm slightly less ...

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What I was kind of more surprised by, not disappointed necessarily,
is that we find partial support for Bennett's Law.

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The average household in our, across our five contexts substitutes
fine staples for coarse staples, substitutes protein for coarse

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staples, both of which are consistent with Bennett's Law.

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But you'll notice that there is a glaring omission, right?

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We don't find that they substitute protein for fine staples.

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So this is kind of like this middle step where people might, where
you think, well, they would move away from rice and consume more

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chicken perhaps, or more fish.

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We don't see that step.

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What we do find is that people will substitute chicken and maybe pork
and beef for sorghum and millet, and they substitute rice for sorghum

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and millet. But we don't find that middle step, which may just ...

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I mean, we don't know whether that's kind of a noise problem in the
data, where, you know, it's the data are just a little bit too noisy

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to detect that. We find the right sign in that direction, but we just
don't find significance, is what we find.

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But it is exciting.

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I mean, you know, I said I was disappointed.

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That is not entirely true.

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I mean, I'm very excited about providing the first credible test of
Bennett's Law in the literature.

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It's something that's been kind of on my mind very much since I
learned about it.

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I thought, this is fantastic.

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This is entirely true, entirely true based on my expectations or
based on my intuition and the patterns that we observe in, kind of, in

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our lives.

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So if I, if I may just kind of a little personal aside.

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My parents, you know, you don't have to go very far up the family
tree to find people who were living in rural areas of Quebec in

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poverty and people for whom even ...

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You know, if I talk to my mother, she will tell you that a meal is
not a meal unless it's got starch.

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So a meal is not a meal if it doesn't have potatoes.

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A meal is not a meal if it doesn't have bread.

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And she will entertain the possibility of pasta and rice as well,
which are not exactly endemic to French Canada, but she will entertain

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that possibility.

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And so these things don't change very quickly, I think, across
generations, because of habit formation and the way we eat.

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And that might be something to look into, I think, as a next step of,
sure, okay, you see that people themselves will change a little bit at

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the margin, but there's a lot of holdovers from history.

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There's a lot of holdovers from culture and from these are habits of
consumption that are formed well in infancy.

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Right? I mean, you look at how people eat and they'll say, well, I've
always eaten this way when I was little, and there's all kinds of

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emotions and kind of cultural baggage that is tied into that, and
personal history that's tied into how people eat that demand might

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not switch as easily for food as it does, say, for VCRs or the type
of computer that you're using.

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JEREMY:
Maybe this is a digression, or maybe ...

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Well, if ...

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Is there a kind of inverse Bennett's Law that when people are rich
and educated and have been for a while,

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they start eating lower, they start eating whole grains and less meat
and quote unquote, healthy.

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MARC:
That is a fantastic question.

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That is where my mind has been for, I would say, about ten years,
because when I learned about Bennett's Law, yes, I thought, hey, you

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know, I've lived in Madagascar.

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I certainly have seen people in a cross section of Malagasy society,
right, certainly eat lots and lots of rice at the low end of the

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income scale, eat a lot more meat.

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So the guys that I was working with, the enumerators that were
working with me on my, on my survey when I did my dissertation

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fieldwork. They they loved meat, right?

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Whenever we would go out as a team and I was footing the bill, those
guys would go all in on meat.

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And they were very happy to eat, you know, like more than rice and
greens.

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So I've seen that.

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And, you know, we see it in our own experience and again, in a time
series sense of my grandparents and my parents and the way they were

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raised and the way they eat.

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And so that I asked myself, okay, but this is very interesting.

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It tells us what happened in the past from a development sense,
living in a high income country.

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But quo vadis, right?

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What am I looking at for the future?

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And so I've got an undergraduate student, a wonderfully talented young
woman.

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And best of all, she is intellectually curious and she's driven, and
she loves to think about food policy.

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But what she is doing is, using qualitative evidence to document what
are the consumption patterns of people in this country, in the United

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States, across the income domain.

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And so my initial speculation -- and she she doesn't have very firm
results yet -- we met yesterday for the, not for the first time, but

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for the first time she brought some qualitative results.

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But my expectation going in was exactly as you say, right as you get
to a certain income level -- and sorry for this very roundabout

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answer, it took a while to get here -- but as you get to a certain
income level, you start demanding different food.

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You start worrying about health aspects of the food you're consuming.

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Sure, Bennett's Law tells you that as you get rich, you're going to
consume more animal sourced foods.

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And that's certainly true is true in what EEshani, Katherina, and I
find in our paper.

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But if you look at the data in the United States, for instance, you
see that people consume a lot more fish and seafood, a lot plant, a

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lot more plant derived protein.

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I mean, I am an example myself.

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A colleague is visiting here who is giving our Friday seminar and she
is staying with us.

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And this morning I was making her coffee and I said, what do you
want?

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We have regular milk, but we also have pea milk and almond milk
because my wife likes to drink pea milk with her coffee and I drink

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almond milk, and we have dairy milk because that's what my daughter
eats in her cereal and, you know, little kids should probably get

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dairy milk with all the enhancements and enrichments that it has.

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So yes, we certainly see that in the data, right?

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That as people get very wealthy, they will substitute away from this,
away from kind of like straight up animal source protein and go

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towards vegetable or plant derived protein.

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And even within kind of animal source, they're going to look at fish
and seafood more than anything.

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So you're entirely right.

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JEREMY:
Okay. Going going back to the poorer people and their demand for meat
and animal protein, if it's kind of, if

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it's lower than may be expected, does that mean that fears about the
impact of demand for animal

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protein on greenhouse gas emissions-- so more livestock, more
greenhouse gas emissions, more climate change -- are those fears then

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exaggerated?

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MARC:
I hesitate to say that this is but one estimate.

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My sense if I were to go purely with our estimates, I would say yes.

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Maybe those fears are a little bit exaggerated.

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That doesn't mean that they're wrong, right?

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It just means that they are less than what we were expecting.

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That being said, the fact remains that income elasticity for a food
demand for animal sourced foods remains

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positive. Which means that as countries that are on the lower to
middle income scale develop, they are going to again, the sign is

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right, right? The sign is what people thought it was.

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And so as as the demand for food, as the demand for animal source
protein goes up in low and middle income countries, something is going

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to have to give if we want -- with the goal of climate -- if we want
to kind of hit those climate targets.

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And thus I think it is incumbent on high income countries to kind of
examine their own consumption patterns, because where I have a

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problem as an economist and where I have a problem as a, you know, as
a critical thinking citizen, is when I hear policymakers kind of look

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at those demand patterns and say, oh, well, people in low income
countries are going to have to adjust their consumption and move away

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from ... And there are a lot of people like that who will kind of
lecture low and middle income countries and say, oh, you got to, don't

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do what we did, right?

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Do as I say, not as I did, which I find very hypocritical because
there comes a stage of development where we are not

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working in offices, typing on computers all day.

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Right? People do physical work in the manufacturing sector or stuff
that's not necessarily a services sector, where you need you need to

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grow strong and tall.

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And the way you do that is by consuming enough animal source protein.

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I'm not a nutritionist, but from what I know, you can get enough
protein from plant derived foods.

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But from what I know, you don't get the nine necessary amino acids in
plant derived proteins the way you get them as easily available in

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animal source foods. And so to deny that to billions of people when
you're sitting pretty here in your ivory tower, I find this a little

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bit, you know ... It's not, you know, it's not just wrongheaded, it's
also hypocritical.

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JEREMY:
Yeah. I mean, the Eat Lancet, the original Eat Lancet diet was a
classic example of, oh, no, poor people mustn't eat meat.

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Nobody must eat meat.

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Anyway, leaving that aside, finally, in the paper, you actually say
that increased income had a limited impact

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on food consumption and in turn, on nutritional well-being.

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But you also say that cash transfers are effective, and that's
especially if you compare them to nutritional supplements and in-kind

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transfers. So, I'm a policy maker.

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What's your best advice?

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MARC:
I think ...

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So my best advice would be do ...

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cash transfers are indeed effective right?

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They have, they hit several targets.

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We're looking at one slice of what those cash transfers do.

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And the good thing about cash transfers is that they're very
straightforward.

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They are incredibly simple to administer.

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And so if you think about well what's cost effective, what's easy to
do is ...

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Giving people cash is easy to do and then it gives them ...

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And this is where I may differ from many other policymakers or from
many policymakers and other economists or other social scientists ...

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But I think when you give people cash, they will use it for what they
think is best for them.

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And sure, you're going to have some collateral damage, like someone's
going to use the cash to drink it, someone's going to use the cash

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for, you know, to buy cigarettes with it, to buy illicit drugs.

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That is not something you can fix.

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And that is something that, at any rate, as the development process
occurs, you're going to see more and more of that.

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So I find the whole cash transfer argument to be very appealing.

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It's very administratively simple and it delivers results even if the
results are more humble, even if, or even if the estimates of the

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effects are more sobering than what you thought going in, as I did
with this paper.

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JEREMY:
Marc Bellemare of the University of Minnesota, reaffirming the idea
that giving poor people cash is a good idea, even if they don't

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spend quite as much of it on food as one might like.

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I'll put a link to the paper by Marc and his colleagues in the show
notes at Eat This Podcast.com, along with some other links that you

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might find interesting.

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I hope you enjoyed this episode, and if you did, it would be great if
you would tell a friend or even the world at large.

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Discovering new things to listen to remains the weakest link in
independent podcasting.

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And by spreading the word, you can help.

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That's all for now.

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Don't forget, you can follow me and ask questions on Instagram and
Mastodon.

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The links are on the website at Eat This podcast.com.

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So from me, Jeremy Cherfas and Eat This Podcast, goodbye and thanks
for listening.