Malnutrition in developing countries is a major constraint on both human and economic development, being directly or indirectly responsible for a substantial proportion of the existing high levels of preventable morbidity and mortality, especially among women and children. For example, it has been estimated that over 20% of worldwide disability-adjusted life years (DALYs) due to mortality and morbidity can be attributed to malnutrition, with some more speculative estimates putting the proportion at around one half (Gillespie and Haddad, 2001). Also, 55% of deaths of children under five are directly or indirectly attributable to malnutrition. In young children, malnutrition can impair physical, mental and cognitive development due to decreasing motivation, curiosity, and reduced play and exploratory activities. There is also clear evidence that malnutrition rates are disproportionately concentrated among the poor (Wagstaff and Watanabe, 2000). The Bolsa Alimentação program is part of a recent reversal in the latter trend. Many Latin American governments, including those in Mexico, Colombia, Honduras and Nicaragua, are now undertaking large programs to encourage investments in the human capital of children in poor households through cash transfers linked to nutrition, health, and education programs. Programs like Bolsa Alimentação demonstrate recognition by the government of the costs of undernutrition and the willingness to undertake targeted interventions towards its eradication.