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.


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