Economics of Nutrition


The close relationship between economics and nutrition runs in two directions.

  • First, nutrition influences economic conditions. Economic historian Robert Fogel has argued that improved nutrition was a decisive factor for improved health and successful economic development in Europe and the United States during the nineteenth and twentieth centuries (Fogel, 2004). More recently, rising rates of obesity have affected rates of chronic disease in developed countries, raising health-care costs.
  • Second, economic conditions influence nutrition. Prices and incomes are leading determinants of food choices, dietary quality, and household food security.

This article addresses selected aspects of the economics of nutrition in developed countries. The economics of nutrition in developing countries are discussed in other chapters. Developed countries (and some less-developed countries) simultaneously face nutrition problems from both overconsumption and underconsumption. Throughout this article, the United States is taken as a case study for the developed world, in part because of the easy availability of data.

Four leading causes of death in the United States are influenced by dietary choices: heart disease, cancer, stroke, and diabetes. Increased rates of overweight and obesity in recent decades have been associated with each of these diseases. This has happened at the same time as rates of being overweight or obese among adults have increased from 50% of men and 40% of women in the early-1960s to 73% of men and 64% of women in the midto late-2000s (National Center for Health Statistics (2011)). In the United States, obesity may be responsible for $147 billion per year in medical costs, approximately 10% of all medical expenditures (Finkelstein et al., 2009), with some economists estimating even larger effects.

Meanwhile, the federal government assesses the extent of food-related hardship in the United States using a survey based measure of food insecurity, which is defined as not being able to afford sufficient food for an active healthy life for all household members at all times. Based on responses to questions in the Current Population Survey, the US Department of Agriculture (USDA) estimates that 17 million households (or 14.7% of all US households) were food insecure in 2009. In 4.6% of US households in 2009, the survey respondent reported experiencing hunger at some point during that year.

This article focuses on economic principles and research that are useful for understanding policy decisions about nutrition issues. Section The Effect of Economic Conditions on Nutrition describes how prices, income, and other factors may affect nutrition. Section A Framework for Nutrition Policy

Options summarizes economic as well as commonly applied noneconomic perspectives on policy options to address nutrition concerns. The remaining sections review real-world applications related to four leading categories of policy responses to nutrition concerns: The next four Sections Food Assistance Programs, The Economics of Information Policy, Direct Interventions: Taxes and Subsidies, and Government Supply Interventions discuss food assistance programs; policies to improve nutrition information; taxes and subsidies to guide consumer food choices; and other government interventions to affect supply. The final Section Behavioral Economics: Nudges discusses recent insights from behavioral economics regarding policies to nudge consumers in the direction of healthier choices.

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