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The relationships between diet and health are once again the center of debate over farm and food policy. Targeted food aid programs—Food Stamps, Aid to Families with Dependent Children, and the Women, Infants, and Children Program—can create incentives for food purchases and consumption that are not consistent with those created by programs to support farm prices and incomes—marketing orders, target prices and deficiency payments, the sugar program, and farm price supports. The result could be that food aid recipients spend more on food but are presented with incentives to eat unhealthy diets due to policy induced price distortions. Understanding the economic forces behind food and nutrient consumption is, therefore, an important research topic.

This article discusses a new method to analyze the demand for food and nutrients, and consumer welfare. The foundation for this method is an extension of Gorman's class...

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