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CONSEQUENCES OF THE CRISIS 73


a day). The international measure is quite imperfect, although the Inter- national Comparison Program will soon be releasing internationally com- parable poverty-specific cost-of-living indexes. In the absence of better measures, all these studies use international poverty lines, but this choice can potentially make a considerable difference to the results.7


In addition to these general limitations, the individual studies have some specific limitations (Table 3.5). Wodon et al. (2008) consider different food items for different countries, which generally constitute dissimilar shares of total consumption, casting some doubt on whether their results are highly comparable. Dessus, Herrera, and Hoyos (2008) only examine the effects of aggregate food consumption on urban poverty, assuming constant shares of food expenditures and fixed food/nonfood elasticities across countries. Moreover, their estimates often contradict findings from the other two stud- ies (Appendix Table A.4), suggesting measurement error may be a problem in their results. Appendix Table A.4 compares urban poverty estimates in the handful of countries analyzed in at least two of the three studies. The com- parisons indicate that in at least five of the countries listed the results differ greatly across two of the three studies. In Cambodia, Nigeria, and Ghana, the Dessus, Herrera, and Hoyos (2008) estimates of urban poverty changes are several percentage points higher than those of Ivanic and Martin (2008) and Wodon et al. (2008) for total poverty changes. For Senegal and Guinea, the Dessus, Herrera, and Hoyos estimates are considerably smaller than those from Wodon et al. In most other cases the differences are negligible. On this basis—and with significant doubts about the magnitude of price transmission within countries—we conclude that these cross-country micro- economic studies point to the possibility of marked increases in hunger, but they do not provide reliable indications of the actual effects of rising food prices on poor and vulnerable people.


Global Estimates of the Impacts of Rising Food Prices on Poverty and Malnutrition


When a global crisis emerges there is an understandable demand for global estimates of just how serious the crisis is. From the average impacts of their


7 Ivanic and Martin (2008) provide some robustness tests, indicating that the sign of their effects are indeed quite robust. ADB (2008) gauges poverty effects in Pakistan and Philippines using national poverty lines, but in Pakistan’s case this line is much higher than the US$1 per day line, hence the Asian Development Bank’s estimates of the impact on poverty are many times larger than those estimated by Ivanic and Martin (2008). Ivanic and Martin also find that the results for Pakistan are sensitive to changes in the price shock being simulated, with rural poverty declin- ing slightly for a 10 percent shock but increasing slightly for a 20 percent shock.


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