Sunday, September 29, 2013

Should Hamburgers and French Fries be heavily taxed?

Fighting youth body fatness: The role of food prices 


Michael Grossman, Erdal Tekin, Roy Wada, 28 September 2013
According to the World Health Organization, childhood obesity is one of the most serious public-health problems of the 21st century. The prevalence of obesity among children has been on the rise globally over the last several decades and is now an epidemic in the US.
  • Since the mid-1970s, the proportion of children aged 12 to 19 who are obese has more than tripled from 5.0% to 18.1% in the US (Ogden et al. 2010).
These trends are extremely alarming.
  • Childhood obesity has been associated with a host of chronic health problems, such as high blood pressure, hypertension, gallbladder disease, and Type 2 diabetes as early as adolescence (Serdula et al. 1993; Freedman et al. 1999; 2007; Hill, Catenacci, and Wyatt 2006).
Children who are obese during early childhood are likely to be obese during adulthood. This not only exacerbates the aforementioned health problems, but also leads to negative long-term psychological and labour market outcomes ranging from poor self-esteem and depression to discrimination and lower wages (Daniels 2006; Mocan and Tekin 2011; Dietz 1998; Strauss 2000).

Why the extra weight?

There is a long list of explanations offered for the rapid rise in childhood obesity and overweightness. These include:
  • Falling food prices.
  • Increased demand for sugary drinks.
  • Advertising of unhealthy foods targeted at children.
  • Increased time spent in sedentary activities, such as watching TV or videos, using a computer, or playing computer games.
  • Lack of vigorous physical activity.
  • Increased food-portion sizes.
Just as there is no single explanation for the obesity epidemic, there is no single or simple solution. Most public interventions aimed at improving child and adolescent health generally take the form of policies that limit access and provide price incentives or disincentives.
The latest policy proposals for reducing childhood obesity rates involve raising the prices of unhealthy, nutrient-dense food items such as sugar-sweetened beverages and fast-foods through taxations. Such policy proposals are based on findings that selective applications of taxation and subsidies are effective in shifting food consumption away from unhealthy food towards healthier alternatives (Cawley 2010; Powell and Chaloupka 2009).
  • In general, empirical studies that examined the effects of prices on obesity found stronger effects than studies that examined the effects of food taxes (Powell, Chriqui, and Chaloupka 2009; Fletcher, Frisvold, and Tefft 2010).1
  • There is also reasonably consistent evidence demonstrating that fruit and vegetable prices, particularly of the non-starch variety, are associated with lower weight outcomes while fast-food prices are associated with higher weight outcomes for the adolescent population (Powell et al. 2013).
Moreover, these effects tend to be larger for minorities, children in lower-income families, and children whose mothers have less than a high school education.

Problems with the BMI as an indicator of obesity

The existing evidence almost exclusively comes from studies that rely solely on body mass index (BMI) as the measure of obesity. This is not surprising since BMI is easy to calculate and readily available from many social science datasets, but its reliability for use in epidemiological studies has come into question recently.
  • It is argued that some of the weak or mixed results documented by studies using BMI may be due to its limited ability to correctly distinguish body fat from lean body mass (e.g., Yusuf et al. 2004, 2005; Romero-Corral et al. 2006, 2007).
Since it is body fat (and not fat-free mass) that is responsible for the detrimental health effects of obesity, several studies caution against a sole reliance on BMI and point to a need for using direct measures of body composition in obesity studies (e.g. Smalley et al. 1990; Romero-Corral et al. 2006).

Our contribution

In a recent paper, we use clinically obtained body composition measures to conduct a comprehensive and comparative analysis of the effects of various food prices on body fatness among youths ages 12 through 18 and compare the sensitivity of our findings to results using BMI (Grossman, Tekin, and Wada 2013). Ours is the first study to consider clinically measured levels of body composition to examine the effects of food prices on body fatness among youths. It is important to assess the extent to which alternative body fat measurements are reliable and precise in the identification of the degree of obesity among youths in order to better understand the risk factors associated with obesity and develop policies to counter these risk factors.
The body composition measure that we employ is percentage body fat (PBF). We derive our PBF measure from three separate sources, two of which rely upon bioelectrical impedance analysis (BIA) and one of which relies upon dual energy x-ray absorptiometry (DXA). We also employ clinically measured height and weight to estimate the effects of prices on BMI. We draw on data from the restricted-use versions of National Health and Nutrition Examination Survey (NHANES) to merge various county-level time-varying price variables.


Our findings suggest that:
  • Increases in the real price of one calorie of food for home consumption and the real price of fast-food restaurant food result in significant reductions in the in PBF among youths.
  • An increase in the real price of fruits and vegetables has negative consequences for these outcomes.
  • Measures of PBF derived from BIA and DXA are no less sensitive and in some cases more sensitive to the food prices just mentioned than BMI, and serve an important role in demonstrating that rising food prices (except for those of fruits and vegetables) are associated with reductions in obesity rather than in body-size proportions alone.

Policy implications

These findings have important implications for the optimal targeting of public policies designed to reverse the epidemic of childhood obesity. In particular, they have implications for how changes in agricultural, tax, and subsidy policies might affect food and beverage consumption patterns. 
  • We show that selective taxes or subsidies may be able to accomplish part of this goal through changes in food prices.
We also document that uniform increases or decreases in the price of food have the expected impacts on body fatness.
  • It should be kept in mind that taxes are blunt instruments that impose significant welfare costs on individuals who consume food in moderation.
There is also the question as to whether parents may more easily and immediately affect the choices made by their children than the government policies.
Some of our results point to higher rates of time preference and lower expected future wage rates among non-white parents and youths as explanations of why minorities are more sensitive to fast-food prices and less sensitive to fruits and vegetables prices than whites. These interpretations add to the existing evidence on the wide range of benefits to early childhood intervention programs emphasised by Heckman and colleagues (e.g., Conti and Heckman 2012). We view our contribution as an important input into the policy debate concerning the most effective ways to reverse the upward trend in obesity.


Jennifer Palladino said...

I definitely think that prices and convenience is a huge contributor to obesity. The fact that fat food restaurants are so cheap, quick, and easy is making it so simple for consumers to eat unhealthy. Who would want to go to the store and buy fruits and vegetables at a higher cost, with the added time for preparation when they could simply go to the drive through. I believe that costs should change. Unhealthy foods should definitely be taxed more than healthy foods. Americans tend to go with convenience and a bargain, and I think if they were saving money by eating healthier, more would be apt to do so.

Maria Biondi said...

This article makes a fair argument on whether to tax or not tax certain foods and fast food restaurants. This isn't just about the government making money but it also has to do with the obesity issue we have here in the United States. Since the 1970's obesity has more than tripled from children ages 12-19. This statistic proves that obesity in the U.S has only increased and will most likely continue to increase unless someone does something about it. Increasing taxes on unhealthy food will make the demand for it decrease if the price increases on junk food.

Anthony Rocco said...

This article is a very good one about child obesity and food prices. The article stated that in the last 40 years, the child obesity rate nearly tripled, that is a huge amount. I think the most recent increase is because of the economic recession , for the last few years the economy hasn't been doing to well, which means people had less income, more people were unemployed, and it made people spend thier money wisely. In a recession most people won't be going out to eat at fancy restaurants and eating healthy things, they will go for a cheap and unhealthy meal like Mcdonalds a lot more often then they usually would. Fast food is a good example of the income elasticity of demand, fast food purchases are at a higher rate when the economy goes down. This is another big thing with minorities and low-income people, because they don't have a lot of money to spend, the parents will feed their kids cheap fast-food meals to save money. I agree with the article that increasing the taxes on fast food and unhealthy products will stop obesity because if the product costs more people will have to allocate there scarce resource, which is money in this case, to feed there family healthier products.

Christina Sassone said...

This article has some really good points to it. I find it interesting how the obesity rate has tripled in the last 40 years. I feel that our society has become very unhealthy in their choices of food. Of course the economy has an effect on this. If the prices of food were not so high then the rate would not be so high. Low income families would not feel the need to eat fast food every night because the price is cheaper. Although the unhealthy food is easily and cheaply produced, it is leading to this obesity problem. I also feel that the obesity rate has tripled due to the lack of exercise the youth is getting. This comes from the developing technology our world has become so used to. Instead of riding a bike, kids are sitting at home riding a bike through a video game and this is not giving them the exercise they need. In general I think the food prices and taxes should be adjusted making the healthy and organic food more affordable.

Colby Stover said...

The price of food without a doubt affects the health of Americans. With many people struggling to get buy and trying to support their family as best they can, they have to buy cheaper food. After reading this article, I discovered that cheaper food is worse for you per calorie opposed to real homemade food. This leads to childhood obesity which also affects that child's future. That child is now more likely to be obese because they were as a child. More people than ever are eating as fast food places rather than restaurant. This can be seen through the major increase in fast food stocks such as McDonalds and Wendy's. Overall, it is clear that the price and demand for food is a major factor behind obesity.

Rich Gordon said...

Child obesity is a huge issue in the United States. We are one of the only nations in the world that have such a huge problem with this issue. There is really nothing we can do to stop this crisis besides convincing people to eat healthy, and raising bad food prices. Fast food joints, burger shacks, and ice cream places should be taxed so it is more of a hassle to get food like that. For example, cigarettes are taxed heavily most places in the U.S so people will stop smoking. Child Obesity can use the same tactic.

Anthony Caronia said...

There is one seemingly obvious solution to this issue. Since food is clearly price elastic and there is a direct correlation between the low cost of fast food and the increased rate of childhood obesity, if the prices of fast food were to skyrocket, childhood obesity would subsequently diminish. While people have the right to choose what they eat, they sometimes don't have the means to. This ties into the HDI; corporations are profiting tremendously but there is a drastic increase in childhood obesity (i.e. the quality of life is arguably lowered).

Mary O'Shea said...

This article held a lot of facts about childhood obesity, and how this has now become an epidemic in the United States. In the last 40 years alone, the childhood obesity rate has tripled. This is mainly due to falling food prices, increasing demand for sugary drinks and unhealthy snacks advertised on television aimed at fat children watching television instead of playing outside, lack of physical activity, and overall increased portion sizes. One should not have to eat until their plate is finished, they should eat until they are full. I believe that the only way to help this rising epidemic, is by posing a tax, or increasing the price of unhealthy food and lowering the price of organic food.

Dominic Gomez said...

A lot of people criticize Americans for being overweight, but the fact is that fast foods are among the cheapest and most convenience food out there. Fast food restaurants such as McDonalds and Burger King are inferior goods, most people do not want to eat them, but they do because it's cheap. Demand have definitely increased since the 2008 recession. Foods that are not as unhealthy, are more expensive. The government should not only tax fast food joints, but also use the money earned to subsidies other food. If the prices were more or less the same, then the decision on what people eat would not have an economic factor.

Nicholas Beato said...

Without a doubt in my mind fast food restaurants should be taxed because its one of the main causes of obesity in America. Not only fast food restaurants but the parents of the obese children are at fault because they are the ones supplying their kids with these unhealthy foods.People choose fast foods restaurants because they are cheap but once they get taxed the prices will go up. And people of low income families have a higher rate of obesity so they will be searching for less expensive choices such as fruits and vegetables which are health foods. I found that in the article it states that with the rise in foods prices, with the exception of fruits and vegetables there had been a reduction in obesity in people. I also found out that obesity causes gallbladder disease which I had known before reading the article. I feel that taxing fast food restaurants would be a start to help cut down on the obesity in America, before he epidemic becomes too large to handle.

Alexa Piccoli said...

For some time now childhood obestiy has been an epidemic in the United States and it is not getting better, only worse. I do not agree with this article when it says that BMI indications are not good in determining obesity since this method has been used for quite some time and although it is not a complete measure it gives a good indication of an obestiy scale. With that being said, I do belive that a tax, or higher prices on fast food will help this epidemic. But, as touched upon at the end of this article, it should be the parents that intervene to stop this probelm more so than the government. Parents should make healthier choices for their children and enourage and create an enviornment where they are getting physical activity. The fact that prices of healthier choices are higher is a problem that will be hard to fix considering how cheap fast food really is. I think people just have to be more conciouncious of what they eat and what they choose for their children. Awarness of the epidemic is also something that will make it better.

Kristoff Kolodko said...

I believe that unhealthy foods should be taxed heavily in order for people not to buy them for there kids. With Child obesity more than tripling in the last forty years there has to be a problem with kids eating from all these unhealthy places. If the government did in fact put a junk food tax that would raise the prices high enough the demand would start lowering. With that in place people would looking for healthier alternative because it would be cheaper than eating junk foods.

Ashleen Ulysse said...

This article does make a good point of making burgers and fries(fast foods)higher and price and reducing the price of a healthy alternative. I was just thinking that in doing that wont it be the same as just switching the circumstances from the poor to the affluent? Like, the rich white people usually have jobs that consume most of their time making it more likely to serve their kids fast food which are more convenient. The epidemic will still be evident in out society. I think we should just eliminate the fast food all together. Then there is not room for contraindications of any sort.

Matthew Ramos said...

I think it would be a great idea to increase taxes on fast food. These inferior goods attribute to child obesity, which result in a host of health concerns for our nations youth. I think healthy foods should be made more affordable, so that struggling families are not forced to buy preservative packed chemically enhanced food. This trend of child obesity has a negative impact on our economy; not necessarily our GDP, but it negatively influences the HDI (Human Development Index). I think it is ridiculous that the Government has begun to enforce laws on the portion sizes of sugary drinks etc. in certain states. However, I do think that Government should assume some responsibility regarding this issue. I think that schools should be required to serve healthy food alternatives instead of just cheap fast food to students. Physical education programs in our schools should be required to educate our youth on the severe health effects of fast food, and inform students of what a healthy diet consists of. What I liked about this article was that it explained how inaccurate BMI measurements are for calculating fat mass. There are several inexpensive simple methods of calculating body fat percentage that can be done by physical education teachers; the cheapest method being caliper measurements, which have been proven by multiple studies to be just as, or more accurate than biometrical impedance analysis. This is an issue that needs immediate attention; if we do not start to control this issue the future of our nation will consist of obesity, disease, and shorter life expectancies.

Kenneth Reilly said...

I believe this article touches on a major problem that needs to be fixed in America. The prices of fast food compared to prices of healthy foods are absurd. It is ridiculous that I can buy three cheeseburgers at McDonalds for three dollars yet a small cup of fruit at the pace cafeterias costs four dollars. Prices lead people to simply buy cheaper food that is easier to get and supports obesity. I believe an excess tax on unhealthy foods needs to be passed to increase the purchases of healthy foods. Healthy foods also need to have their prices reduced as the high prices provoke people to buy sugary substitutes. Low income families should have the same access to healthy eating as upper class people do. This will help our life expectancy and decrease the amount of diseases that branch off of obesity like diabetes.

Tiffany Pabon said...

This article points out a big problem in the U.S. which is child obesity. The fact that from the 1970's to now the percent of children obesity tripled is not surprising to me. With new inventions like video games and TV it’s not surprising that children stayed indoors more often and performed less sports and activities that were considered active. Another reason explained in the article contributing to the obesity rate is price of foods. Many nutritional foods are more expensive than those foods considered unhealthy like fast food. I believe that the government is doing good by thinking of making a change to better this situation. The government should increase taxes on unhealthy foods and on fast food. This will create a greater demand for healthier foods since they are cheaper. Although doing this will not be as easy, I remember that when the mayor of NYC decided to eliminate X-large drinks and make 20oz. bottles of soda no longer available for sale the courts fought against it strongly and so did the people.

Matt Corrie said...

This article really illustrates just how bad of an economic bind the united states are in. This article expresses this through the discussion of obesity. It explains how people are more willing to get a cheaper and more fattening food because they don't have the money to afford a healthy meal. Places like McDonalds and other fast food restaurants really benefit when the united states economy isn't doing well. Most people would rather sit down and eat a healthy meal if they could but the fact that they do not have enough money really decreases the amount of people that go out to a classy restaurant. Especially with the fact that there is always a dollar burger available at McDonalds.

Kenneth said...

The obesity rate in America is still very high, and one of the main reasons is that fast food is so cheap and easy to get. If one was to tax fast food and lower the price of the more healthy foods, and increase the publicity of getting in shape, then the rate would definitely decrease by a large amount. The fact that it is more expensive to eat healthy and stay in shape than it is to eat badly and slowly kill yourself is the reason why people do it. If they were to tax the fast food places, and other unhealthy eateries heavily then it would help tremendously.