Institute of International Economic Studies (United States)
Abstract
Rice is the staple food in Bangladesh. Thus, the price of rice is an important economic factor in Bangladesh especially for poor people. In Bangladesh, during the price hike of 2008-09, rice price increased by 40% on an average across the country. Interestingly, the consumption of rice in some rural parts of Bangladesh also increased during that period. Thus, the focus of this paper is to examine the practical evidence of this positive relationship between the consumption of rice and increasing price which is addressed as Giffen behavior (inverse of normal behavior) for rice consumption in Bangladesh. By analyzing secondary data obtained from some specific rural parts namely Patharghata (Barguna), Chaddagham (Comilla), Sadar (Jamalpur), Kaligang (Jhenaidaha), Sreemangal (Moulvibazar) and Sadar (Naogaon) of Bangladesh, we have found a new insight in this context. We find that the price elasticity of staple food for the poor people depends significantly and nonlinearly on the severity of their poverty. In order to have an effective design of welfare for the poor people, we need to understand this heterogeneity of their consumption behavior
