Thursday, February 20, 2014

India Food Distribution Problem

One of the fundamental objectives of economics is the production, allocation and distribution of goods and services.  How a society produces and allocates goods and services in a optimal way is a question that is fundamental to economics.  Thus when one reads in the New York Times that in India food is produced in record amounts and simultaneously about 20% of the Indian population is under-nourished seems to be an area ripe for economics to help improve the human condition.  So what can be done to take surplus food (in some cases rotting on the side of a road) and get it to those who need it most?  In the article, the Indian food subsidies have increased production but at a cost to the Indian government, making the allocation and distribution open to corruption.  If the government were to change how poor Indian's were to buy this excess food - to a system of cash payments or "food stamps" - this would increase (not perfectly, but would increase the health of millions of people).

While I talk about the theoretical implications of the supply and demand model improving market efficiency, I would hope that you are thinking about instances like this were these ideas have very significant real world benefits, and are not just some "ivory tower" ideas.

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