Income, food inflation, and human capital development in Nigeria: A mixed method approach

Abstract

Human Capital Development (HCD) encompassing the improvement of individuals’ skills, knowledge, and health is critical for economic growth. In Nigeria, however, HCD indicators remain weak, and rising food inflation poses additional risks, especially in the context of unstable income levels. While many studies explore the link between income and HCD, the moderating role of food inflation in this relationship remains underexplored, particularly from the perspective of real-life experiences. This study investigated the interaction between income (measured by Gross National Income per capita), food inflation, and HCD (proxied by school enrollment and life expectancy at birth) in Nigeria. Adopting an explanatory sequential design, the study used annual data from 1994 to 2023 sourced from the World Development Indicators and Nigeria’s National Bureau of Statistics. The auto-regressive distributed lag (ARDL) model estimated both short- and long-run dynamics. In the qualitative phase, 163 participants, selected through multi-stage sampling, shared their lived experiences through in-depth interviews. Findings showed that while income positively influenced life expectancy, its effect on school enrollment was insignificant. Food inflation had a significant positive effect on school enrollment but not on life expectancy. However, the interaction of income and food inflation negatively and significantly impacted both HCD indicators. Thematic analysis identified four core themes: financial constraints, perceived importance of education, compromise in education and health, and adaptive strategies. While household faced significant financial constraints, school attendance was prioritized with compromise in educational resources, nutritional quality and health spending. The study concludes that while rising income and food inflation each contribute positively to human capital development (HCD), their interaction particularly with persistent rising food prices can hinder overall progress. It recommends government intervention to stabilize food prices to enhance the positive impact of income on HCD in Nigeria.