The economic cost of malnutrition

“The first thousand days in the mother’s womb and the first two years after birth, are critical for a child’s physical and neurological development. During these periods, children’s nutritional status is affected by the quantity and quality of food they consume. Breast- feeding exclusively in the first six months conveys critical benefits and it is vitally important that complementary foods introduced afterwards contain the right quantities of macronutri- ents – calories and protein – as well as micronutrients. When these are lacking, children fail to grow at a healthy rate. Studies that have followed children from infancy through to adulthood find that this lost growth is never fully regained. Thus these individuals end up shorter in height than they would have been if their diets had been adequate and they had not been subject to repeat infection. Vitamin A deficiency is fatal and zinc deficiency affects children’s physical growth and leads to increased susceptibility to a number of infections including diarrhea and pneumonia. Iodine defi- ciency adversely affects development of the central nervous system leading to loss of IQ and mental retar- dation. Iron deficiency constrains cognitive development in children.

The persistently malign effects of undernutrition in early life have significant economic consequences in adulthood. A number of studies show that shorter individuals have lower earnings in adulthood; although, the precise reason for this – the direct effect of reduced height (stunting) on physical productivity, the social benefits associated with height – vary from place to place. There is evidence that undernutrition in early life, manifested as low birth weight, increases susceptibility to coronary heart disease, non- insulin dependent diabetes, and high blood pressure. However, the greatest economic consequences are those resulting from neurological damage. Studies that have followed undernourished preschool children find that they attain fewer grades of schooling and develop poorer cognitive skills, such as those relating to problem solving. By contrast, there is strong evidence that interventions combating undernutrition in early life convey lifelong benefits. Everywhere in the world, schooling and cognitive skills are vital for success in the labor market. A useful rule of thumb is that every additional grade of schooling raises wages by eight to 12%. So individuals without such skills and with less schooling earn lower wages, which increases the likeliness that they will be poor.

The human and economic costs of undernutrition would seem to make a compelling case for investments – purposeful actions by governments, non-governmental organizations and the private sector – to reduce undernutrition. A number of studies have looked at the costs of direct interventions to reduce macro- and micronutrient deficiencies relative to the economic benefits that they potentially provide. There is an element of uncertainty surrounding these calculations – as there is with any benefit: cost analysis – because they rely on estimating the costs of these interventions today and calculating the stream of economic benefits that accrue over the decades that follow. With that caution in mind, a good economic investment is an investment where the benefit-cost ratio exceeds one; that is to say that for every dollar spent today on investments to reduce undernutrition, the future stream of economic benefits valued in today’s terms must exceed one dollar. Measured in this way, there is overwhelming evidence that investments to reduce micronutrient deficiencies and chronic undernutrition have high benefit-cost ratios: every dollar spent iodizing salt gene- rates $30 in economic benefits, every dollar spent on iron supplements for mothers and children aged six to 24 months generates $24 in economic benefits, and every dollar spent on vitamin A generates economic benefits estimated to be $40 or more.

By the standards of economics, these are impressively high benefit-cost ratios. Not only that, the costs of these investments are trivially low. In addition to current expenditures for combatting undernutrition, an additional annual investment of about $650 million a year – less than two dollars from every North American and western European – would be enough to eliminate deficiency in the 95 million preschool children who are vitamin A deficient, iodine deficiencies affecting nearly two billion people and anemia affecting 80 million pregnant women. A larger investment is needed for the combined interventions needed to reduce chronic undernutrition – current estimates suggest that around nine and half billion dollars per year would reach 90% of children in the 34 countries that account for 90% of the burden of undernutrition in the developing world (1, 2).

There is intrinsic value in eliminating undernutrition – it is simply the rightthing to do. But beyond this, it is good economics too. Investments in reducing chronic undernutrition and micronutrient deficiencies have considerable economic benefits.”

Based on: Hoddinott J. The Economic Cost of Malnutrition. In: The Road to Good Nutrition. Karger Medical and Scientific Publishers. 2013.

1. Horton S. et al. Scaling up nutrition: What will it cost? Washington, DC: World Bank, 2010.

2. Hoddinott J. et al. Investments to reduce hunger and undernutrition. In: Lomborg B. (ed) Copenhagen Consensus 2012. Cambridge: Cambridge University Press, 2013.