Health, wealth, or equity? Trade-offs from households’ allocative decisions

Households’ allocative decisions have potentially large implications for the health and welfare of their members. We analyze a dataset of rural Bangladeshi households to estimate: (i) a benchmark level of nutritional adequacy that households could afford by selecting different foods and reallocating them among members, and (ii) the associated trade–offs in terms of income and equity preferences. Using a novel set of non–linear health production functions, we show that households can afford adequate diets that meet the clinical needs of nearly all nutrients. Micronutrient adequacy is primarily achieved by changing household–level food choices, while caloric adequacy depends more on intra–household food allocation. We further show that households do not face a clear health–income trade–off. Instead, we find a degree of inequality aversion (for energy) and inequality preference (for micronutrients) that leads to intra–household allocations that are not fully efficient from the perspective of the production of health. • Bangladeshi diets are inadequate in terms of calories and multiple micronutrients. • Diets are not constrained by low incomes, nor do they determine them. • Changes to food choices would almost eliminate micronutrient inadequacy. • Caloric adequacy depends more on food allocation than food choices. • Households are averse to inequality in caloric adequacy but not micronutrients.