A new paper shows that food prices affect obesity – but the impact is so small that even huge taxes won’t have more than a tiny impact on BMI.
Cheap Donuts and Expensive Broccoli: The Effect of RelativeÂ Prices on Obesity
Jonah Gelbach, Jonathan Klick & Thomas Stratmann
Americans have been getting fatter since at least the mid 1980s. To better understand this public health problem, much attention has been devoted to determining the underlying cause of increasing body weights in the U.S. We examine the role of relative food prices in determining an individual’s body mass index, arguing that as healthful foods become more expensive relative to unhealthful foods, individuals substitute to a less healthful diet. Using data from the National Health Interview Survey (NHIS) for the period 1982-1996, we find that individual BMI measures, as well as the likelihood of being overweight or obese, exhibit a statistically significant positive correlation with the prices of healthful relative to unhealthful foods. These results are robust to endogenizing the relative price measure. While the magnitudes of our estimates suggest that relative price changes can only explain about 1 percent of the growth in BMI and the incidence of being overweight or obese over this period, they do provide some measure of how effective fat taxes would be in controlling the obesity epidemic. Our estimates imply, for example, that a 100 percent tax on unhealthful foods could reduce average BMI by about 1 percent, and the same tax could reduce the incidence of being overweight and the incidence of obesity by 2 percent and 1 percent respectively.