On food security and the economic valuation of food

The paper presents an economic evaluation of food and the cost of food insecurity. Building on behavioral regularities of consumer behavior, the analysis estimates the benefit of food at the individual level and at the world level. It finds an inverted-U relationship between food benefit and income. At the individual level, the “food benefit/income” ratio starts at 0 under extreme poverty, increases with income to reach a maximum of 4.4 when income per capita is around $13,000, and then declines slowly as income rises. The paper shows very large aggregate net benefit of food. The analysis also evaluates the cost of food insecurity. It shows that aversion to food insecurity is pervasive, the coefficient of relative risk aversion to food insecurity being around 2.7. The analysis evaluates empirically the cost of food insecurity. We report the cost of food insecurity under alternative scenarios, documenting that it can be large in situations of exposure to significant downside risk.