There may be an economic cure for the nation’s obesity: Hike the price of food.
Raising the price of a calorie for home consumption by 10 percent might lower the percentage of body fat in youths about 8 or 9 percent, according to new research from the National Bureau of Economic Research.
On March 9, 2006, over SEVEN YEARS AGO, I wrote in this very space:
I think... the main cause of the upward trend in weight in the U.S...FOOD IS CHEAP and getting cheaper. I present as exhibit A the graph on the right.
The graph maps the relative price of food (as measured by the BLS Consumer Price Index for all food realtive to the overall CPI for all goods) from 1980-2005. As you can see, food prices have fallen dramatically since 1980 relative to other goods. The economist in me says "Hmmmm...food is getting cheap relative to other goods, maybe people are eating more." But the story gets better.
If we look at the price of 'fats and oils', 'sugar and sweets' and 'fruits and vegetables' relative to 'All foods', again we see a not so surprising result (see the other graph to the right).
The prices of fats and sweets have fallen since 1980 relative to all foods while the prices of fruits and vegetables have risen dramatically.
So why are people gaining weight? Sure part of it might be genetic or social or environmental, but I think it's equally plausible that the reason is economic. If the price of food falls relative to other goods, and the price of fatty and sweet food falls relative to other foods, what would you expect? People will substitute eating fat and sweet foods for more expensive alternatives like eating fruits and vegetables and exercising.**
Why do we care? The CDC estimates that Medicaid and Medicare expenditures for overweight and obese people were between $25 and $50 billion in 1998. Can anyone say 'Fat Tax'? I'm now ducking.
