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A look at how income affects consumption habits

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As people and countries get richer, they tend to eat fewer cereals and more processed foods.

Last week, the National Sample Survey Office, India's official source of regular large-sample survey statistics on consumption, employment and other core socio-economic issues, put out its 558th report. The report is based on a nationally representative sample of over 1 lakh households in every state and UT, and measures the levels of consumption of various goods and services. As we've noted in the paper, the data points to a >big revival in the functioning of India's Public Distribution System. We also looked at how >income circumscribes India's food choices. That second story is the one we wanted to look at a little more closely today.

1. As people and countries get richer, they tend to eat fewer cereals and more processed foods - from bread to chips. The richest 5% of urban India each consumes two bags of chips per month on average.

As people get richer, they also distinctly consume more meats, fish, milk, eggs and other nutrient-rich food; every individual in the top 5% of urban India consumes nearly 1.5 kg per month of various meats, which works out to over 6 kg per family. (The poorest 5% of rural India, on the other hand, consumes just over 100 gm of meats per person per month, the bulk of it fish and chicken.) Richer Indians also begin to eat fewer potatoes and more spinach and fruit.



2. Toddy is by far rural India's most preferred alcoholic beverage, and country liquor urban India's. Even at the highest end of urban India's income distribution, people drink less than 100 ml per month of beer on average, and just over two small pegs of foreign/ refined liquor.



3. In general, rural India consumes more rice and wheat per capita than urban India. This, in addition to a general decline in the quantity of cereal consumed across the country over time, is believed to be in line with a global trend of declining cereal consumption as people get richer and eat more meats and processed foods, as also their lives get more sedentary.



However, we found that the decline in cereal consumption is not really that sharp as you rise up the income ladder, and does not in fact decline at all in rural India, where people consume more cereals as they get richer.

4. The dynamics of what people smoke are also fascinating. As incomes rise in urban India, people first smoke more cigarettes and more bidis. From the 20th-30th class of the income distribution, bidi smoking begins to decline and only cigarettes increase, and only in the top 5% does cigarette consumption outdo bidi consumption. In rural India, on the other hand, bidi consumption far outdoes cigarette consumption even at the top.



5. What do households prioritise spending on once they get richer? For this, we look at the relative amount of the total household budget spent on various non-food items across classes.



Rural Indians begin to spend more on medicines, tuition and fuel, and can now spend less of their total budget on clothes, toiletries and detergents as they get richer.

Urban Indians begin to spend much more on tuition and fuel, and start spending on domestic help as they get richer.



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Printable version | Dec 6, 2016 11:44:28 PM | http://www.thehindu.com/data/a-look-at-how-income-affects-consumption-habits/article6180214.ece