In India, average per capita calorie intake has declined even as real per capita monthly expenditure has increased. Since cross sectional evidence suggests a robust positive relationship between the two variables, the trend emerges as a major puzzle. Using household-level data from 4 recent rounds of National Sample Survey data (1987-88, 1993-94, 2004-05, and 2009-10) on consumption expenditure and a novel instrumental variable estimation strategy we find strong evidence for a food-budget squeeze as an explanation of the puzzle: rising expenditures on cooking fuel have led to falling calorie intake.
This paper was published in World Development (68), April 2015, pp. 82-95. It can be accessed at: http://www.sciencedirect.com/science/article/pii/S0305750X14003854
