Price risk and poverty

A common feature of markets in many developing economies is a lack of integration. This leads to substantial variation in prices of basic commodities across space, and risk to households from local supply shocks. In the context of India’s PDS, this project examines three related aspects of price risk: First, how exposed are poor households to price risk of basic commodities, and what are the consequences for nutrition, child outcomes, and productivity? Second, to what extent could price risk provide a rationale in favour of in-kind transfers relative to cash? Third, is the effectiveness of in-kind transfers in providing insurance against price risk undermined by corruption incentives?

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