Food and Diet: How Can Economics Contribute to Better Outcomes?
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Transcript of Food and Diet: How Can Economics Contribute to Better Outcomes?
Food And Diet: How Can Economics
Contribute to Improved Outcomes?Laurian Unnevehr
Senior Research Fellow, IFPRIProfessor Emerita, University of Illinois
Presentation to the Global Food Scholars RTG ProgramGoettingen University
September 19, 2013
Introduction
• Rising rates of obesity and associated medical costs bring policy debate
• “Food environment” approach has driven policy debate
• Economists have much to offer but are late to debate
• Lessons from high income countries for developing countries
Do we have an “Obeso-genic” Food Environment?Illustration by Meredith Nelson
Three Economic Perspectives
• Health Economics: Value of improved health and extended life is large
• Neo-classical Economics: Seeks market failure and weighs benefits against costs
• Behavioral Economics: Altruistic paternalism to “nudge” people towards better decisions
Overview
• Costs and causes of obesity• Public health policy recommendations• Economic evidence and research needs– Prices– Information– Access– Standards
THE COSTS OF DIET RELATED DISEASE
How much does rising obesity cost?
U.S. Body Mass Index Distribution is Shifting Up
Rising U.S. Childhood Obesity
All 2-5 yrs 6-11 yrs 12-19 yrs0
5
10
15
20
25
198020002008
% of children
U.S. Obesity and Overweight Direct Costs
• Healthcare direct costs estimated at $210 billion in 2008$– Half are paid through Medicare or Medicaid– One-fifth of total health care costs
• Combined dynamic of rising health care costs and chronic disease incidence is theme– $550 billion by 2030
Sources: Cawley and Meyerhoefer, 2012; Finkelstein et al., 2012
Global Burden
• 1.5 billion people overweight or obese• WHO estimates deaths from overnutrition
exceed those from undernutrition• Diet related disease has a global cost
estimated at $1.4 billion
Source: WHO, World Economic Forum and Harvard School of Public Health, 2011
CAUSES OF OBESITY
What are the causes and what do they suggest about interventions?
Why are We Getting Fatter? Official Reasons from the U.S.
Surgeon General• Eating too many calories and not getting
enough physical activity. • Body weight is the result of genes,
metabolism, behavior, environment, culture, and socioeconomic status
• Behavior and environment play a large role causing people to be overweight and obese.
U.S. Calorie Intake Increased 20% over 20 years
19701972
19741976
19781980
19821984
19861988
19901992
19941996
19982000
20022004
20062008
0
500
1,000
1,500
2,000
2,500
3,000
U.S. per capita loss-adjusted food availability: Total Daily Calories
Source: USDA/ERS
2,195
2,717
Meat, Eggs, and Nuts
Dairy
FruitVegetables
Flour and Cereal Products
Added Fats and Oils and Dairy Fats
Caloric Sweeteners
Less than HALF the recommendedamount
TWICE the recommended amount
U.S. Percent of Daily Calories from Different Food Groups
Source: USDA/ERS
Will Income Driven Trends Follow the U.S.?
2005
87
38 52
5
5385
130
24
Bangladesh
1596
10056
515
75
285
63
468
90
China
Starchy staples
Starchystaples
NutrientRich Foods
NutrientRich Foods
Fats and SugarsFats and Sugars
Data Source: FAO Food Balance Sheets, 2009
Food Away from Home
0
5
10
15
20
25
30
35
1980
2005
Percent Calories
Every meal away from home adds 134 calories compared witha meal at home.
Sources: USDA/ERS from NHANES data; Todd et al. (2010)
FoodAway FromHome
FastFood
Food Market Development Follows Same Path
Highest Income
Other High Income
Middle Income Low Income
Share of food expenditures in modern retail outlets
77 60 58 32
Share of food expenditures for packaged food
52 33 40 26
Source: Regmi, Takeshima, and Unnevehr, ERS, 2008.
0 10 20 30 40 50 60 70 801500
2000
2500
3000
3500
4000
% Overweight Adults Follows Caloric Intake Per Capita Across Countries
High Income
Middle Income
Low Income
% Adults Overweight (BMI ≥ 25)
Calo
ric In
take
(Kca
l/Pe
rson
/Day
)
Sources: FAO; WHO
Indonesia
Egypt
Zambia
Nicaragua
Summary: Obesity Causes
• Obesity rates are increasing• Energy imbalance is a simple explanation– Too many calories– Too little activity– Many structural reinforcements
• But difference in country paths suggests much we do not understand
PROPOSED POLICIES
What are the recommendations for action from the public health community?
What are the Proposed Solutions?
Major Reports• National Academies 2012• World Bank 2011 • OECD 2010• World Economic Forum
2011
Common Themes• Nutrition labels• Advertising controls• Public information• Regulation of school /
workplace meals• Tax unhealthy/ subsidize
healthy foods
US National Academies Childhood Obesity Report 2009
• Attract supermarkets to underserved neighborhoods
• Calorie labeling in chain restaurants• Nutrition standards for foods served to
children• Tax to discourage foods of little value• Media campaign
Now FederalPolicy
Michelle Obama’s “Let’s Move” campaign
• Four Pillars– Physical Activity– Healthy Choices– Healthier Schools– Access to Affordable Healthy Food
What is the Economic Evidence for Interventions?
• Prices of foods• Information in restaurants
• Access to retail outlets • Standards in school lunch
Influence individual choice
Influence choice architecture
FOOD PRICES
How do consumers respond to changes in food prices?
Tax and Subsidy Policies
• Some U.S. states tax soda– 13 states have tax of 5-7%
• SNAP (Food Stamp) Healthy Incentives– SNAP experiment shows 30% price incentive leads
to 25% increase in F&V consumption• Danish fat tax– Flat rate of $1.29 per lb of saturated fat
Soda
10% price drop 20% tax5% more
consumed
16% less consumed
Sources: Dong and Lin (2009); Andreyeva et al. (2010); Dharmasena and Capps (2012)
Very modesteffects on caloriesor weight.
Fruits and Vegetables
Evidence: Demand Simulations
Evidence: Simulations of Alternative Tax Policies
Tax Inputs Rather than Products
• Tax sweeteners at processing stage or tax sweet products at retail
• Input tax consumer surplus loss is 1/5 that from retail tax
Tax Calories rather than Foods
• Tax on calories more efficient way to address obesity than either sugar or fat tax or F&V subsidy
• Net social gain with reduction in health care costs
Source: Miao, Beghin, and Jensen, 2011 Source: Okrent and Alston, 2012
Evidence: Prices Explain Health Outcomes
• Recent studies suggest that relative prices explain variation in weight and disease outcomes
Dark Green Vegetables Price PercentAbove Starchy Vegetables
Higher prices for vegetables increases diabetes incidence and medical expenditures (Meyerhoefer and Leibtag 2010)
Green Vegetables Relative Price to Starchy Vegetables Varies Across U.S.
Source: USDA/ERS
Low-fat milk cheaper than soda in some US regions
Source: USDA/ERS
Higher prices forsoda lead to reduced BMIin children. (Wendt and Todd2011)
Price of low-fat milk relative to soda
International Examples of Long Run Price Impacts on Diets
• Real pulse prices rising over time in India associated with lower consumption of pulses for all income groups (Kadiyala, 2011)
• Lower real prices for edible oils after WTO accession in China associated with greater energy density in diets and higher calorie consumption (Ng et al., 2008)
• Countries with lower food prices have faster increase in obesity (Huffman et al)
Research Needs
• How do prices shape long run demand?• What would reduce the relative prices of
healthy alternatives?• Could agricultural research investments be
altered to support healthy diets?
INFORMATION
How will consumers respond to new calorie information in restaurants?
Nutrition Labels
• US packaged food mandatory since 1993
• EU guidelines• Private sector symbols
Calories on Menu Policies
• Some U.S. cities• Affordable Care Act mandate• FDA proposed rule in 2011– Chain restaurants with 20+ locations– Menus to have calories; reference to daily intake– Benefits exceed costs even if limited use by
consumers
Evidence: Consumer Response to Menu Calorie Labels
• Only modest calorie reductions• “Framing”, defaults, and type of signal matter• Can alter competitive position in market• Results echo those for food product labels
Sources: Downs et al. (2009); Bollinger et al. (2011); Nelson and McCluskey (2010); Ellison, et al. (2011)
Evidence: Information Influences Supply
• Mandatory labeling motivates food producers to change product formulation– Trans fat label in 2006 led to rapid substitutions in
major brands – Benefits all consumers whether they read the
label or not– CDC reports reduction in trans fat in blood in 2009
• Menu labels likely to lead to reformulation in restaurant offerings
Sources: Golan and Unnevehr 2009; CDC 2012.
International Label Practices Need Improvement
• Access to Nutrition Index rates multi-national food companies for their nutrition practices in developing countries
• Companies score lowest on labeling practices out of all categories rated– Companies do not disclose sufficient detail about their policies
on labeling or on health and nutrition claims.– Few companies commit to follow Codex guidance on the use of
health and nutrition claims in markets where the use of such claims is not regulated.
– Many companies with international operations do not apply their policies globally.
Source: http://www.accesstonutrition.org/labeling
Research Needs
• How will consumers and firms respond to new disclosure requirements in high income countries?
• How would stricter enforcement of labeling norms in emerging markets shape food offerings?
ACCESS
What is the role of food access and the local food environment in food choices and health outcomes?
Policy to Address Access
• Local efforts– Philadelphia: Tax incentives
for new grocery stores
– Los Angeles: Limits on new fast food outlets in low income neighborhoods
• U.S. farm bill funds ($400 M) to improve access
Evidence: Food Access• 4% of US population at risk of inadequate
access (ERS 2009)
• Fast food access close to schools increases child obesity (Currie 2010)
• Retailer commitments to Let’s Move initiative
Spatial Retail Access and Diet Quality in Developing Countries
• Indonesian households that spend more at modern outlets more likely to increase fresh fruit, fresh vegetables, oils, sweets and processed snacks. (Toiba et al., 2011)
• Benin households with better market access tend to have greater diet diversity but also more overweight adults (Bellon and Ntandou, 2012)
• Access costs influence Chinese dietary diversity (Liu et al., 2013)
Research Needs
• What determines food retailer decisions about locations? About quality and scope of healthy foods offered?
• How does access shape purchases? For what kinds of households is access important?
STANDARDS
Will changes in standards for school lunch programs succeed in changing children’s diets?
Policies for School Lunch Standards
• 22 million children in USDA school lunch program
• New U.S. school lunch standards in Jan 2012• 13 EU countries have school lunch standards
New standards increase fruits, vegs, whole grains and low fat milk; reduce sodium and saturated fat.
Evidence: School Lunch Standards
• Longstanding evidence regarding benefits for student performance
• Mixed evidence about role of school lunch in childhood obesity
• Healthier lunches may cost 5 to 7% more
Sources: Meyerhoefer and Yang (2011); Newman, et. al (2009); Newman, 2011.
Behavioral Cues Show Potential
Experiments conducted by Cornell researchers reveal behavioral psychology can be used to encourage children to eat more healthy food.
Source: Wansink, Just, and McKendry, Lunch Line Redesign, New York Times Op-Chart, 2010.
Home Grown School Feeding Programs
• Promote healthy school meals sourced from local farmers. Seen as “win-win” for nutrition and market development.
• Ghana program evaluation underway (Imperial College/IFPRI)
• Will the old questions have different answers?
Research Needs
• Does offering healthier school meals change children’s overall diet quality? Will it change their long run eating habits?
• How does institutional demand for healthier foods influence the overall food supply?
CONCLUSIONS
What evidence does economic research provide?
Expected Policy Impacts
• Access, information, standards interventions:– Likely modest positive effects on energy imbalance– Likely benefits > costs
• Limitations for addressing obesity are clear, so further debate on appropriate public role
Three Economic Perspectives
• Health Economics: Current trends project high potential value of improving diet
• Neo-classical Economics: Can be more efficient in achieving any target; benefits and limits to price & information policies
• Behavioral Economics: Choice architecture approach suggests new interventions but scope unclear
Economists Needed to Answer Important Questions
• How ag / food system contributes to health outcomes– How to reduce relative prices of healthy foods– Ag research portfolio to support better diets, more
nutritious food• Understanding firm behavior– Product offerings– space and quality– Opportunities, limits for self-regulation
• New data expands our abilities
Lessons for Countries Passing Through the Dietary Transition?
• All economic and structural forces point towards the same path for diet and health.– But understanding international variation could inform policy
• Limited impact of current recommended policies provides little guidance.
• Potential to “nudge” early:– Relative prices and market development for nutrient-dense
foods.– Regulation of labels to international norms.– Avoid in-kind transfers that encourage calories over diet
quality.
Illustration by Meredith Nelson
Is this a healthy food environment?
Illustration by Meredith Nelson
THANK YOU!
Drawn from: Unnevehr, L. J. “Food and Health: Can Economics Contribute to Improved Outcomes?”, American Journal of Agricultural Economics, 95(2), 2013, 220-227. AAEA Fellows Address, 2012.