Economics of Nutrition

Government Supply Interventions

The final set of policies we consider is related to increasing or restricting access to food. One subject which has received much attention is whether some areas have sufficient access to appropriate food. In a relatively large public-health literature, evidence is presented about the correlations between areas with a high concentration of low income residents and a dearth of large retail food stores selling healthy foods such as food and vegetables. Congress mandated in the 2008 Farm Bill that USDA study this so-called problem of food deserts (areas with limited access to affordable and nutrition food) and suggest policy responses, resulting in a report (USDA Economic Research Service, 2009), a food desert locator, as well as other action. Although there is ample evidence that some local areas have limited food access, little or no research has established the causes of such limited access, and such information is a key input to designing appropriate policies (Bitler and Haider, 2011). For example, limited access could be the result of supply or demand factors, and if it is the result of demand factors, supply interventions are not likely to ameliorate deficiencies. Yet further policy intervention seems likely, and may provide useful variation for new research.

Another policy lever that is widely discussed is zoning or other regulations limiting the types of food establishments or types of foods available in various locations. This is in part based on findings about locations of fast food outlets affecting calorie intake and obesity (Currie et al., 2010).

Policy-makers also may limit sales of competitive foods in schools (competitive foods are all foods offered for sale at schools besides those provided by USDA school meals programs). Should more localities enact policies banning such sales, it may provide variation to understand how access to such foods affects school health. Schools facing financial pressures are more likely to allow competitive food sales and have students with larger BMI (Anderson and Butcher, 2006). However, some research finds that such sales do not necessarily lead to more consumption of junk food, suggesting substitution across in school and out of school locations (Datar and Nicosia, 2012).

Behavioral Economics: Nudges

The economic understanding of consumer responses to prices and income and the policy proposals for new subsidies or taxes and supply interventions all rely on an economic theory of consumer choice. A lively body of current economic research investigates situations where consumers do not behave rationally, perhaps leading to opportunities for ‘nudging’ consumers toward more healthful choices (Thaler and Sunstein, 2008).

Neoclassical theory predicts that consumers will eat less when the marginal cost of an additional unit – the price to the consumer – is higher. They will tend to overeat at an all-you-can-eat restaurant, because the marginal cost of additional food is zero, no matter what the entry price of the meal. Yet, surprisingly, recent research found that consumers of an all-you-can-eat pizza meal actually consumed more pizza if the price of the meal was higher (Just and Wansink, 2011).

These differences between actual consumer behavior and traditional economic assumptions about rational behavior do not mean consumers are irrational or foolish in the everyday sense of the term. Instead, these behaviors may show that consumers need to simplify the cognitive burden of difficult decisions by following predefined heuristics or ‘rules of thumb.’ Some of these heuristics are the subject of considerable research:

  • Default offerings may affect consumer choices. For example, if a quick service restaurant chain includes milk by default in children’s meals, customers may agree to purchase the milk with the meal. Yet, if the chain includes soda by default, the customers may more frequently keep the sugar-sweetened beverage rather than make a special effort to request milk.
  • Distractions also may affect consumer choices. For example, it has been found that consumers who were required to make other decisions at the same time were more likely to choose cake over fruit salad, whereas consumers who were not distracted were more likely to choose the healthier offering (Shiv and Fedorikhin, 1999). Hunger or time stress also may affect people’s decisions.

This new approach to behavioral economics has raised some hopes for inexpensive nutrition improvements, by making subtle changes to the setting or environment in which choices are made. For example, some suggest that students in school meals programs might make better decisions if the location of the salad bar were altered, or if a different tender (cash or school meals program card) were required for different products. This approach also has generated renewed scrutiny of the empirical evidence for other health policy proposals, such as taxes on less healthy food or new labeling rules for restaurants (Loewenstein, 2011). Of course, many of the same lessons can also be used by food marketing professionals to promote food options with any health profile. Future research will determine whether these new tools of behavioral economics make a small or big difference for consumer choices. And, if the effect is big, future developments in both social and commercial marketing will determine whether the changes are helpful for dietary quality. In either case, the willingness to scrutinize assumptions and follow the empirical evidence in new directions is entirely good news for future research on the economics of nutrition.

Bibliography:

  1. Anderson, P. and Butcher, K. (2006). Reading, writing, and refreshments: Are school finances contributing to children’s obesity? Journal of Human Resources 61(3), 467–494.
  2. Andreyeva, T., Long, M. W. and Brownell, K. D. (2010). The impact of food prices on consumption: A systematic review of research on the price elasticity of demand for food. American Journal of Public Health 100(2), 216–222.
  3. Bhattacharya, J. and Bundorf, M. K. (2009). The incidence of the healthcare costs of obesity. Journal of Health Economics 28, 649–658.
  4. Bitler, M. P. and Currie, J. (2005). Does WIC work? The effects of WIC on pregnancy and birth outcomes. Journal of Policy Analysis and Management 24(1), 73–91.
  5. Bitler, M. P. and Haider, S. J. (2011). An economic view of food deserts in the United States. Policy Retrospectives. Journal of Policy Analysis and Management 30(1), 153–176.
  6. Bollinger, B., Leslie, P. and Sorensen, A. (2011). Calorie posting in chain restaurants. American Economic Journal: Economic Policy 3(1), 91–128.
  7. Currie, J., Della Vigna, S., Moretti, E. and Pathania, V. (2010). The effect of fast food restaurants on obesity and weight gain. American Economic Journal 2, 32–63.
  8. Datar, A. and Nicosia, N. (2012). Junk food in schools and childhood obesity: Much ado about nothing? Journal of Policy Analysis and Management 31(2), 312–337.
  9. Drewnowski, A. and Darmon, N. (2005). Food choices and diet costs: An economic analysis. Journal of Nutrition 135(4), 900–904.
  10. Dubois, P., Griffith, R. and Nevo, A. (in press). Do prices and attributes explain international differences in food purchases. American Economic Review.
  11. Finkelstein, E. A., Trogdon, J. G., Cohen, J. W. and Dietz, W. (2009). Annual medical spending attributable to obesity: Payer-and service-specific estimates. Health Affairs 28(5), w822–W831.
  12. Fletcher, J., Frisvold, D. and Tefft, N. (2010). The effects of soft drink taxation on soft drink consumption and weight for children and adolescents. Journal of Public Economics 94(11–12), 967–974.
  13. Fogel, R. W. (2004). The Escape from hunger and premature death, 1700–2100 Europe, America, and the Third World, vol. 38. New York, NY: Cambridge University Press.
  14. Frieden, T. R., Dietz, W. and Collins, J. (2010). Reducing childhood obesity through policy change: Acting now to prevent obesity. Health Affairs 29(3), 357–363.
  15. Gundersen, C., Kreider, B. and Pepper, J. (2011). The economics of food insecurity in the United States. Applied Economic Perspectives and Policy 33(3), 281–303.
  16. Harding, M. and Lovenheim, M. (2013). The effect of product and nutrient specific taxes on shopping behavior and nutrition: Evidence from scanner data. Cornell, NY: Cornell University Working Paper.
  17. Hoynes, H. and Schanzenbach, D. (2009). Consumption responses to in-kind transfers: Evidence from the introduction of the Food Stamp Program. American Economic Journal: Applied Economics 1(4), 109–139.
  18. Hoynes, H. W., Page, M. and Stevens, A. (2011). Can targeted transfers improve birth outcomes? Evidence from the introduction of the WIC program. Journal of Public Economics 95(7–8), 813–827.
  19. Jin, G. and Leslie, P. (2009). Reputational incentives for restaurant hygiene. American Economic Journal: Microeconomics 1(1), 236–267.
  20. Loewenstein, G. (2011). Confronting reality: Pitfalls of calorie posting. American Journal of Clinical Nutrition 93, 679–680.
  21. Meyerhoefer, C. D. and Yang, M. (2011). The relationship between food assistance and health: a review of the literature and empirical strategies for identifying program effects. Applied Economic Perspectives and Policy 33(3), 304–344.
  22. National Center for Health Statistics (2011). Health, United States, 2010: With special feature on death and dying. MD: Hyattsville.
  23. Ratcliffe, C., McKernan, S. M. and Zhang, S. (2011). How much does the Supplemental Nutrition Assistance Program reduce food insecurity? American Journal of Agricultural Economics 93, 1082–1098.
  24. Shiv, B. and Fedorikhin, A. (1999). Heart and mind in conflict: The interplay of affect and cognition in consumer decision making. Journal of Consumer Research 26(3), 273–292.
  25. Smith, T., Lin, B.-H. and Lee, J.-Y. (2010). Taxing caloric sweetened beverages: Potential effects on beverage consumption, calorie intake, and obesity. ERR-100. Washington, DC: U.S. Department of Agriculture, Economic Research Service.
  26. Thaler, R. and Sunstein, C. (2008). Nudge: Improving decisions about health, wealth, and happiness. New Haven Connecticut: Yale University Press.
  27. USDA Economic Research Service (2009). Access to affordable and nutritious food: Measuring and understanding food deserts and their consequences, Report to Congress, June. Available at: https://www.ers.usda.gov/publications/pub-details/?pubid=42729
  28. Wilde, P. E. (2013). Food Policy in the United States: An Introduction. New York, NY: Routledge/Earthscan.
Determinants of Mental Health
Peer Effects in Health Behaviors