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Food Security

The Economic Benefits of Reducing Chronic Undernutrition

by John Hoddinott

  •  May 07, 2015
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Nutrition has always been important to development.  Good nutrition allows for healthy growth and development of children, and inadequate nutrition is a major contributing factor to child mortality.  Improving the nutritional status of children is intrinsically valuable. A large body of evidence now shows that good nutrition is also important for cognitive development, and hence educational success, both of which are important determinants of labour productivity and hence economic growth.

To understand the economic effects of poor nutrition – and in particular the economic effects of chronic undernutrition – it is important to recognize that chronic undernutrition in the first 1000 days has long-term adverse consequences. One manifestation of these is attained stature in adulthood. Data from Brazil, Guatemala, India, the Philippines, Senegal, South Africa and Zimbabwe all show that growth failure in the first 24 months of life is associated with reduced stature in adulthood. The magnitudes of this loss of growth can be large. In their Senegalese study, age-adjusted height deficit between stunted and non-stunted children was 6.6 cm for women and 9.0 cm for men. The economic consequences are captured by evidence showing associations between height and outcomes in the labor market. A useful rule of thumb is that every loss of one percent of attained height in adulthood reduces adult earnings by 2.4%.

Chronic undernutrition has neurological consequences that lead to cognitive impairments with the prefrontal cortex proving to be especially vulnerable. Evidence that undernourished children score poorly on tests of attention, fluency and working memory are consistent with this. Chronic undernutrition adversely affects the hippocampus by reducing dendrite density and by damaging the chemical processes associated with spatial navigation, memory formation and memory consolidation. Chronic undernutrition results in reduced myelination of axon fibers, thus reducing the speed at which signals are transmitted. Lastly, chronic undernutrition damages the occipital lobe and the motor cortex leading to delays in the evolution of locomotor skills.                                        

The cognitive impairments experienced in early life have long-term consequences. In both Guatemala and Zimbabwe, a one standard deviation increase in height-for-age Z-scores (HAZ) increases grade attainment by approximately 0.75 grades; in Zimbabwe, shifting a child from being stunted to being well-nourished would increase schooling by 1.25 grades. In Guatemala, a one standard deviation increase in HAZ increases adult test scores for reading and nonverbal cognitive skills by 0.28 and 0.25 SDs respectively. The economic consequences of these cognitive impairments arise because of the well-documented links between schooling, cognitive skills and earnings and income in adulthood. In Guatemala, an additional grade of schooling raises wages by nine percent and that an increase of one standard deviation in tests of reading and vocabulary raises wages by 35 percent.

Do these economic benefits provide a justification for investments that reduce chronic undernutrition? Working with Harold Alderman, Jere Behrman, Lawrence Haddad and Susan Horton, we calculate benefit: cost ratios of a package of nutrition interventions aimed at reducing stunting and severe acute malnutrition. These ratios vary from country to country depending on their current level of income, projected growth rate, the current rate of stunting, and other parameters.  On average, this package will raise incomes by approximately 11 percent. If we look at the median benefit: cost ratio under the most conservative set of assumptions, we get a value of 18, found in Bangladesh. This means that for every $1 spent on direct nutrition interventions, we obtain $18 on economic benefits. If we are less conservative in our assumptions, these ratios are higher.

Any investment with a benefit: cost ratio that exceeds one is a good investment. By this standard, the benefit: cost ratios for investments to reduce chronic undernutrition are excellent investments. These economic benefits derive largely because averting chronic undernutrition gives children greater capacity to learn and learning is rewarded in the labour market. But these economic benefits should be seen as a complement, not a substitute, for the intrinsically valuable goal of eliminating chronic undernutrition in young children.

                                                         

John Hoddinott is the H.E. Babcock Professor of Food & Nutrition Economics and Policy.

Notes: Financial support for this blog post has been provided by the Department for International Development UK through its support to the Transform Nutrition Consortium. It draws on a number of studies, particularly Hoddinott, J., H. Alderman, J. Behrman, L. Haddad and S. Horton, 2013a. The economic rationale for investing in stunting reduction, Maternal and Child Nutrition, 9(Suppl 2): 69-82 and Horton, S. and J. Hoddinott, 2014. Food security and nutrition perspective paper, Copenhagen Consensus Center, Copenhagen.

This post originally featured on http://news.thousanddays.org/1000-days-blog/economic-benefits-reducing-chronic-undernutrition/ and is republished here with permission.

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