Economic development, inequality, and nutritional outcomes: A 2SLS panel analysis of protein consumption in Indonesia

Abstract

This study examines the relationship between per capita protein consumption and poverty levels in Indonesia using a Two-Stage Least Squares (2SLS) approach within a simultaneous equations framework. The analysis employs panel data from 34 provinces over the period 2015-2024, based on provincially aggregated household-level data, to capture the reciprocal interaction between nutritional outcomes and economic well-being, while accounting for socio-economic factors such as income, education, food prices, and income inequality. The results show that protein consumption variations are more strongly linked to structural factors, especially education and income inequality, rather than short-term income fluctuations. Income inequality significantly shapes protein consumption patterns, reflecting unequal access to animal-based protein across income groups. In terms of prices, beef prices exhibit a more pronounced effect on aggregate protein consumption, while chicken prices tend to be absorbed through substitution mechanisms and price stabilisation, resulting in a weaker direct impact. The findings also confirm a bidirectional relationship between protein consumption and poverty, where higher poverty levels are associated with lower protein intake, and improved protein consumption contributes to poverty reduction through indirect channels such as health and productivity. These results emphasize the need to address poverty reduction and improved access to protein as complementary policy goals. Policy interventions should therefore focus on reducing income inequality, strengthening human capital, and maintaining food price stabilisation to promote more inclusive and sustainable development outcomes.