Food

Nailing Obesity? Put a Tax on Food that Makes People Fat

The prevailing belief is that so-called fat taxes need to be hefty to have a material impact on consumer choice.

Photo Credit: Sarah R/Flickr CC

Original published by Van Winkle's, a new website dedicated to smarter sleep & wakefulness, published by Casper.

In case you haven’t heard, obesity is a national epidemic. Despite considerable attention and visible public health initiatives, including Michelle Obama’s “Let’s Move!” campaign, America’s weight problem has proven hard to fix.  Part of the problem — perhaps the largest part — is socioeconomic. Obesity, and related chronic diseases, disproportionately affects lower-income Americans. But organic, grass-fed health food costs more than artificially flavored, hormone-injected, emotionally satisfying crap. Even with SNAP, and other types of government assistance, the cost of three nutritious meals a day exceeds what millions of families can realistically afford. (Here’s a look at one millennial mom’s struggle to feed her kids on welfare.)

In other words, a poor diet is often just that: the diet of the poor.

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Given that we know cost informs food choice, what do we do? Some say there’s only one choice: Make healthy food affordable, regardless of how much that angers Big Food. For the sake of public health, it’s unethical to let 24-piece nuggets and glazed donuts be the most budget-friendly foods.

Others suggest tackling the issuse from the other side, by implementing a "fat tax" that makes unhealthy foods more expensive.

Consider new research from business school professors at Northwestern University, New York University and University of Michigan. They assessed six years of sales data from 1,700 U.S. supermarkets to determine if slight price differences between lower-and-higher-calorie versions of food affected consumer choice. They published their paper, “Will a Fat Tax Work?” in the journal Marketing Science.

The relative prices of milk with different fat contents (skim, one percent, two percent, whole) differ based on where people live and in what locations they purchase milk. In some cases, stores charge the same price for watery-but-heart-healthy skim and deliciously fattening whole milk. At other stores, the price increases with fat content. But, individual stores don’t determine pricing structure; that’s one by regional chain-store policies.

They found that people choose whole milk over lower-fat alternatives when the price remains constant. This trend especially bore out in lower-income zip codes, where whole milk claims 52 percent of the market share, compared to 25 percent in higher-income neighborhoods.

When whole milk is more expensive — minimally, at 14 cents more per gallon — people change their buying habits, with a more pronounced shift in lower-income areas.

The results are notable, according to study authors, because the prevailing belief is that so-called fat taxes need to be hefty — at least 20 percent — to have a material impact on consumer choice. But this research suggests that even minor price adjustments influence shoppers, particularly those with lower incomes.

"Studies addressing similar questions are often conducted with small, non-representative populations, often university students. What distinguishes our work is the real-world field setting covering sales across the US and observed over a long time period - mimicking what a potential 'fat-tax' would look like and what the long term consumer choices would be," said study co-author Kanishka Misra in a press release.

In the paper, study authors recommend designing a “fat tax” to incentivize buying healthier versions of a food, rather than to discourage purchasing types of food entirely. So, give people a gentle financial push towards baked chips, rather than try to keep them out of the chip aisle altogether. Additionally, they urge making the fat tax an excise tax, meaning tacked on at point-of-purchase, rather than a retroactive sales tax. In other words, people are more likely to follow their wallets if the 14-cent difference is apparent when they reach for the carton.

The proposal sounds reasonable. Still, I say: prioritize making healthy food affordable.