Food prices and public health

09/10/2013 § 8 Comments

The University of Otago announced the results of some research in which I’ve been involved.  The relevant blog post is here. What I really like about the post is the moderate tone:

In the first paper from the SPEND Project, we found that across 20-odd food groups, low-income people and Māori tended to change their consumption of foods more in response to price changes, using New Zealand data.  This is entirely consistent with economic theory – and data about price impacts for other consumer goods such as tobacco.

This suggests – but does not prove for reasons we outline below – that taxes on ‘unhealthy’ foods like those high in saturated fat, salt, and sugar; and subsidies on ‘good’ foods like fruit and vegetables should not only improve diets across the board, but more so among socially disadvantaged groups with worse diets and health to start with.

But the proof is in the pudding, which in this case is the health and economic modelling to see what effect taxes and subsidies will actually have on disease rates.  And due to data limitations our modelling is still only half-baked, no matter which research group’s findings you look at.

The post goes on from there and explains more about the different bits of research.

Of course, there are all the problems with implementing such tax/subsidy programmes, and the philosophical issues with ‘nudges’ and individual welfare. But importantly, we now have better estimates of prices elasticities in order to make better calculations about gains and losses.

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§ 8 Responses to Food prices and public health

  • Tony Blakely says:

    Glad you liked the post Bill. In public health there is a tendency to always want to advocate – but sometimes we simply have to say “we are not entirely sure yet, but we are working on it”. I think that is the case with taxes and subsidies on food. My ‘expert opinion’ (informed by evidence where it exists) is that they are almost certainly likely to improve health, but the effect size is uncertain. I also think the case for better food labeling first is strong – an onus to better inform the consumer before or in parallel with any pricing strategy. But I suspect the time for food taxes and subsidies is nearly upon us.
    Tony Blakely

    • I would definitely agree with the food labelling argument. I’m not sure why there is a such a push-back on them. If nothing else, we could trial a stop-light system of food labels on a temporary basis (pass regulations with a sunset clause) and see what happens.

  • Marcie A Rosenzweig says:

    This theory underlies the arguments for the Chained CPI here in the US. The problem with using a chained CPI for COLAs in things like Social Security is the real “CPI” for seniors is driven largely by medical and housing expenses, two things that are not easily shifted to less expensive options on the fly.

    As for food, the arguments here seem to run from a tax and subsidize approach to the “no nanny state” cries from both the far left and far right of the spectrum especially in reference to the SNAP (food stamp) program. It always interests me that the far right wants no nannies but is equally unwilling to mitigate the greater social consequences of that stance.

    • I’m not willing to buy the ‘no nanny state’ claims. The Farm Bill always seems to find money to subsidise corn, which gets turned into cheap HFCS, which gets turned into obesity and diabetes. The debate about food taxes and subsidies seems to get separated from the production side of things.

  • Matt Nolan says:

    “But importantly, we now have better estimates of prices elasticities in order to make better calculations about gains and losses.”

    Yah elasticities!

    The philosophical issues are pretty sizable though – hard to say much about what is good without a clearly valued counterfactual choice. After all people are allowed to trade-off in an intertemporal margin associated with health – and if the issue is habit formation the tax system seems like a blunt tool😉

  • Interesting article – congratulations, important for the debate.
    Are the household incomes quoted in Table 3 “pre-tax”? If so, would the range of percentages of income spent on food across the quintiles reduce if post-tax incomes were taken into account?

  • […] From the 10 September post at Groping Towards Bethelem – Economics and Culture in Bite-Size Pieces […]

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