Food prices and public health

By Bill Kaye-Blake 09/10/2013


The University of Otago announced the results of some research in which I’ve been involved.  The relevant blog post is here. What I really like about the post is the moderate tone:

In the first paper from the SPEND Project, we found that across 20-odd food groups, low-income people and Māori tended to change their consumption of foods more in response to price changes, using New Zealand data.  This is entirely consistent with economic theory – and data about price impacts for other consumer goods such as tobacco.

This suggests – but does not prove for reasons we outline below – that taxes on ‘unhealthy’ foods like those high in saturated fat, salt, and sugar; and subsidies on ‘good’ foods like fruit and vegetables should not only improve diets across the board, but more so among socially disadvantaged groups with worse diets and health to start with.

But the proof is in the pudding, which in this case is the health and economic modelling to see what effect taxes and subsidies will actually have on disease rates.  And due to data limitations our modelling is still only half-baked, no matter which research group’s findings you look at.

The post goes on from there and explains more about the different bits of research.

Of course, there are all the problems with implementing such tax/subsidy programmes, and the philosophical issues with ‘nudges’ and individual welfare. But importantly, we now have better estimates of prices elasticities in order to make better calculations about gains and losses.