Differential Nutritional Responses across Various Income Sources Among East African Pastoralists: Intrahousehold Effects, Missing Markets and Mental Accounting

In this paper, we explore the relationship between dietary diversity and income in pastoralist households in East Africa. Previous estimates of income elasticities of nutrient demand have ranged from zero to unity. However, these estimates are always based on the total income. One possible reason for this wide range is that dietary behaviour may respond differently to different sources of income if, for example, agents engage in ‘mental accounting', the practice of treating distinct income sources as not fully fungible. Estimating income elasticities with total income may mask these differential responses and result in very different income elasticity estimates depending on which income source changes. Using dietary diversity as a measure of dietary quality, we find that differential dietary responses do exist across income sources among the pastoralist households studied. Possible explanations for this result include market failures for certain commodities, intrahousehold bargaining and mental accounting. These differential effects persist after accounting for intrahousehold bargaining, market failures and after using exogenous variations of the different income sources. While we cannot test it explicitly as an explanation, mental accounting does appear to play some part in explaining the dietary patterns evident in this sample.