Unnevehr Fellows Address


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Food and Health: Can Economics Contribute More? Fellows Address delivered at the AAEA meetings, August 14, 2012

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  • “The prevalence of obesity is so high that it may reduce the life expectancy of today’s generation of children and diminish the overall quality of their lives.” (IOM 2009, p 1-2) The prevalence of obesity is so high that it may reduce the life expectancy of today’s generation of children and diminish the overall quality of their lives. Obese children and adolescents are more likely than their lower-weight counterparts to develop hypertension, high cholesterol, and type 2 diabetes when they are young, and they are more likely to be obese as adults.
  • Finkelstein: 9% is up from 6% in 1998; about half is covered by medicare/medicaid.Cawley and Meyerhoefer: our point estimate of the impact of obesity on medical expenditures is higher for Medicaid recipients ($3674) and the uninsured ($3153) than those with private insurance coverage ($2568); it would be useful to know whether this is due to differences in the health impact of obesity across the three groups or due to differences in the ways that the groups use medical care Tsai, Williamson, and Glick (2010) attempted to systematically and quantitatively summarize the growing literature on the direct medical cost of overweight and obesity. They conducted an informal (no variance estimates) meta-analysis. Although they could draw on a substantial literature, only four studies met their demands for comparability and relevance to US projections: nationally representative samples, analysis of adults of all ages, use of standard BMI cut-offs, and reporting cost or expenditure (not charges). The meta-analysis yielded an estimate of $113.9B ($2008).  One recent study (Cawley and Meyerhoefer (2011)) uses data from the Medical Expenditures Panel Survey (MEPS) and an improved approach that helps distinguish between mere associations or correlations between obesity and medical costs and actual causal costs of obesity. They find that the annual cost of treating obesity in the U.S. adult non-institutionalized population is $210 billion (in adjusted 2008 dollars) or 20.6% of national spending on medical care. These results imply that the previous literature has somewhat underestimated the direct medical costs of obesity.
  • Sweetener consumption rising everywhereNo country consumes recommended F&V“Globalization” of diets through food retailing and packaged food expansionBUT, substantial variation in trends suggests not all factors universal
  • Funded by RWJF and CDC, following earlier reports and focusing on what local govts can do. (Economists on committee were Finkelstein and Rose) “The places in which people live, work, study, and play have a strong influence on their ability to consume healthy foods and beverages and engage in regular physical activity. Local governments make decisions every day that affect these environments.”NINE healthy eating and SIX physical activity strategies. “most promising” for healthy eating are those on this slide. Other suggestions included promoting community access to fresh fruits and vegetables; breastfeeding, drinking fountains; use of social media to reach children. A long list of policies to promote physical activity.
  • Price of fresh/frozen dark green vegetables, relative to fresh/frozen starchy vegetables, 2006. expressed as percent above price of starch vegetables.
  • This suggests two important questions for future research: First, how do food prices shape long run food consumption habits? Meyerhoefer and Leibtag (2010) exploited the surprisingly large regional variation in U.S. food prices to test impacts on health outcomes. Changes in relative prices during the recent recession provide another natural experiment. Increases in commodity prices served as a good proxy for a tax on calories, as prices for snack foods rose relative to those for fruits and vegetables. At the same time, income losses led consumers to reduce expenditures on food away from home for the first time in two decades (Kumcu and Kaufman 2011). National food disappearance data show a leveling off of calories per capita in the last few years and a decline in 2009. It will be interesting to test the importance of prices and income in explaining these changes, to see how they may manifest themselves in obesity trends, and finally to monitor how consumption trends resume with economic growth. Given the different ways that price volatility has played out in markets around the world, there may also be interesting comparisons from other countries. An equally important question is: What would reduce the relative prices of healthy alternatives? Quality changes make it difficult to sort out trends in the prices of fruits and vegetables, but underconsumed vegetables are more expensive than overconsumed starchy ones, and this is particularly true in some U.S. regions with higher rates of obesity (Todd, Leibtag, and Penberthy 2011). Milk is higher priced that soda in some regions and lower in others. What would alter these relative prices? The policy dialogue about how the food supply shapes food choices badly needs answers to these questions. Okrent and Alston (2012) have made a start in examining how farm subsidies influence food supply and better diets. Equally important is how research to improve fruit and vegetable productivity might result in better diets. And since diet diversity is strongly related to better nutritional outcomes in low income countries (Arimond and Ruel 2004), the importance of this question extends beyond the United States. Does the investment in staple food productivity indirectly give us more dietary diversity through freeing up resources at the margin? What kind of direct investments in under-consumed foods are needed to enhance demand through improved quality, availability, and price? Recent commodity price spikes have spurred concern about whether research investments are adequate to boost long run trends in staple food crop productivity. But global trends in diet and health point to the importance of also asking how agricultural research can support better nutrition.  
  • New York, Seattle, San Francisco, standards in San AntonioProposed rule: on menus and menu boards: (1) the number of calories for each standard menu item; (2) a succinct statement concerning daily caloric intake; and (3) a statement indicating that additional nutrition information is available upon request;
  • McCluskey– Substitution to lower, but not lowest calorie alternative, suggesting that information most useful to those who did not already seek lower calories.Lusk – Traffic light signal reduced calories more than just numbers, but also reduced profits most for restaurant.Bollinger et al found a 6% decline in calorie cons; decline came in food purchases, not drinks. No impact on profits on avg and increases revenues for stores near Dunkin donuts.Loewenstein and Downs conducted an experiment with different menu formats for Subway. Calorie content information, incl daily calorie recomm had no impact on sandwich choice. But making low calorie sandwiches the featured items (and higher calorie offerings more difficult to find on the menu) made it significantly more likely for customers to choose the low calorie sandwich.
  • The natural experiment afforded by the restaurant calorie labeling regulation will provide the profession with many potential research projects to understand both consumer and restaurant firm behavior, all of which will be interesting to pursue. But a larger research agenda would be more creative in thinking about where information would be most useful. That is, where would it increase consumer utility? Where would information spark the kinds of changes in nutrient supply (firm response) that would improve diets? What kinds of agricultural research investments will support improved nutrient content in foods, and ultimately in diets?
  • Add HFFI details: $400 million through existing authorities; most ($275M) through Treasury programs such as New Markets Tax Credit program and Community Development Finance Institutions.
  • Farm Bill defined a food desert as a low income community with limited access to affordable and nutritious food. Charged USDA with carrying out a national assessment of the extent of limited access.Census tract where poverty rate at least 20% AND at least 33% are more than 1 mile from a supermarket (10 miles in rural areas). Nationwide, these tracts tend to be areas of persistent poverty and disadvantage– higher percent minority and higher percent vacant housing.About 4% of the US population are at risk of having inadequate access– ERS looked at low income neighborhoods where households are more than a mile from a supermarket. About 2% of US. Population are in low income households have no car and are more than a mile from a supermarket.
  • These limited findings are intriguing but much more could be done to understand how proximity and retail markets shape food choices, especially with the many local experiments underway. How the spatial interaction of transactions costs, availability, quality, and price shapes choices by different consumers is a question that deserves our attention. Food retailer firm behavior is understudied, and there will be new questions arising from recent changes to store formats and marketing of perishable foods in urban areas.
  • Requires schools to increase the availability of fruits, vegetables, whole grains, and low fat milk; reduce sodium, sat fat, and meet nutrition within calorie limits.
  • most schools meet requirements for vitamins, protein, calcium, and iron, only one in five schools served lunches that met the standard for total fat, set at 30 percent of calories or less. These schools tended to be ones that don’t serve french fries or dessert, provide only low fat milk, promote fresh F&V, use more up to date methods of meal planning. Also regional differences– eg., SE more likely to serve high fat meals.
  • Simple changes in the lunch room may “nudge” students to healthier choices. Salads next to checkout, hiding ice cream, etc.
  • Evaluating changes in the school environment is difficult for many reasons, including the obvious potential for children to eat differently outside the school environment, as well as the challenge of measuring whether such policies have any long term impact on dietary habits. Economic research on children and their food choices is very limited, because of course most of our focus is on adult individuals or households as decision makers. While the literature on school lunch programs is extensive, this program is only one part of our children’s food environment. Given the concerns about childhood obesity trends and their implications for future health care costs, understanding how children’s habits are shaped by schools, family, peers, environment, and standard economic variables is an important area for future work. In FY11, USDA spend $32M on NSLP; $9M on WIC, and $3M on CACFP.
  • The three economic sub-field perspectives have all provided useful evidence for current policy debates. Health economics has shown that the potential value of addressing diet and health is large, and that future cost trends are ominous. Neo-classical economics research has shown how to make taxes or subsidies more efficient in achieving any particular target, and has also provided insights into market adjustments in both supply and demand. Neo-classical market and demand analysis has demonstrated the significant distortions that would arise from taxes or subsidies, and has found consistent modest net benefits from mandatory labeling. Behavioral economics aligns most closely with the food environment paradigm in public health, through the focus on choice architecture. Behavioral economics experiments have allowed for creativity in testing potential interventions, and such research has already shown that behavioral cues can lead to changes in food choices in limited settings. Whether such changes can alter long run dietary habits has yet to be explored.
  • Agricultural economists, drawing on all of these subfields, are uniquely positioned to understand how the agricultural and food system contributes to diet and health outcomes. The research questions identified in the discussion above all point to the need for understanding the determinants of food choices in a larger market and policy context, taking into account both consumer and firm behavior. Such research would include understanding the long run determinants of relative prices of under-consumed versus over-consumed foods, identifying the agricultural research investments needed to support healthy diets, and analyzing the determinants of food firm behavior with respect to product formulation and spatial delivery. Answers to these kinds of questions are needed to better inform the food and agricultural sector response to public health concerns.
  • Unnevehr Fellows Address

    1. 1. Food And Health:Can Economics Contribute to Improved Outcomes? Laurian Unnevehr Senior Research Fellow, IFPRI AAEA Fellows Lecture August 14, 2012
    2. 2. 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
    3. 3. Do we have an “Obeso-genic” Food Environment? Illustration by Meredith Nelson
    4. 4. 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
    5. 5. Overview• Costs and causes of obesity• Public health policy recommendations• Economic evidence and research needs – Prices – Information – Access – Standards
    6. 6. How much does rising obesity cost?THE COSTS OF DIET RELATEDDISEASE
    7. 7. U.S. Body Mass Index Distribution is Shifting Up
    8. 8. Rising U.S. Childhood Obesity% of children 25 20 15 1980 2000 10 2008 5 0 All 2-5 yrs 6-11 yrs 12-19 yrs
    9. 9. Overweight and Obesity are More Common Around the World Source: WHO
    10. 10. 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
    11. 11. 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
    12. 12. What are the causes and what do they suggest about interventions?CAUSES OF OBESITY
    13. 13. Why are We Getting Fatter? Official Reasons from the Surgeon General• Eating too many calories and not getting enough physical activity.• Body weight is the result of genes, metabolism, behavior, environment, cu lture, and socioeconomic status• Behavior and environment play a large role causing people to be overweight and obese.
    14. 14. Calorie Intake Increased 20% over 20 yearsU.S. per capita loss-adjusted food availability: Total Daily Calories3,000 2,7172,500 2,1952,0001,5001,000 500 0 Source: USDA/ERS
    15. 15. Percent of Daily Calories from Different Food GroupsTWICE the recommended amount Caloric Meat, Eggs, and Sweeteners Nuts Dairy Added Fats and Oils and Dairy Fats Fruit Vegetables Flour and Cereal Products Less than HALF the recommended amount Source: USDA/ERS
    16. 16. Food Away from Home Percent Calories3530 Every meal away from home adds 134 calories compared with25 a meal at home.201510 5 2005 0 1980 Food Away Fast From Food Home Sources: USDA/ERS from NHANES data; Todd et al. (2010)
    17. 17. % Overweight Adults Follows Caloric Intake Per Capita Across Countries 4000 3500Caloric Intake (Kcal/Person/Day) Egypt 3000 Indonesia 2500 Nicaragua 2000 High Income Zambia Middle Income 1500 Low Income 0 10 20 30 40 50 60 70 80 % Adults Overweight (BMI ≥ 25) Sources: FAO; WHO
    18. 18. Summary: Obesity Causes• Obesity rates are increasing• Energy imbalance is a simple explanation – Too many calories – Too little activity – Many structural reinforcements
    19. 19. What are the recommendations for action from the public healthcommunity?PROPOSED POLICIES
    20. 20. What are the Proposed Solutions?Major Reports Common Themes• National Academies 2012 • Nutrition labels• World Bank 2011 • Advertising controls• OECD 2010 • Public information• World Economic Forum • Regulation of school / 2011 workplace meals • Tax unhealthy/ subsidize healthy foods
    21. 21. IOM Childhood Obesity Report 2009• Attract supermarkets to underserved neighborhoods Now• Calorie labeling in chain restaurants Federal Policy• Nutrition standards for foods served to children• Tax to discourage foods of little value• Media campaign
    22. 22. What is the Economic Evidence for Interventions?• Prices of foods Influence individual choice• Information in restaurants• Access to retail outlets Influence choice architecture• Standards in school lunch
    23. 23. How do consumers respond to changes in food prices?FOOD PRICES
    24. 24. Tax and Subsidy Policies• State taxes for soda – 13 states have tax of 5-7%• SNAP (Food Stamp) Healthy Incentives – Increased value of fruit and vegetable SNAP redemption experiment underway• Danish fat tax – Flat rate of $1.29 per lb of saturated fat
    25. 25. Evidence: Demand Simulations Fruits and Vegetables Soda10% price 16% less drop 5% more 20% tax consumed consumed Very modest effects on calories or weight. Sources: Dong and Lin (2009); Andreyeva et al. (2010); Dharmasena and Capps (2012)
    26. 26. Evidence: Simulations of Alternative Tax PoliciesTax Inputs Rather than Products Tax Calories rather than Foods • Tax sweeteners at • Tax on calories more processing stage or tax efficient way to address sweet products at retail obesity than either sugar or • Input tax consumer surplus fat tax or F&V subsidy loss is 1/5 that from retail • Net social gain with tax reduction in health care costs Source: Miao, Beghin, and Jensen, 2011 Source: Okrent and Alston, 2012
    27. 27. Evidence: Prices Explain Health Outcomes• Recent studies suggest that relative prices explain variation in weight and disease outcomes
    28. 28. Green Vegetables Relative Price to Starchy Vegetables Varies Across U.S. Higher prices for vegetables increases diabetes incidence and medical expenditures Dark Green Vegetables Price Percent (Meyerhoefer and Above Starchy Vegetables Leibtag 2010) Source: USDA/ERS
    29. 29. Low-fat milk cheaper than soda in some US regions Higher prices for soda lead to reduced BMI in children.Price of low-fat milkrelative to soda (Wendt and Todd 2011) Source: USDA/ERS
    30. 30. 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?
    31. 31. How will consumers respond to new calorie information in restaurants?INFORMATION
    32. 32. Nutrition Labels• US packaged food mandatory since 1993• EU guidelines• Private sector symbols
    33. 33. 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
    34. 34. 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)
    35. 35. 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.
    36. 36. Research Needs• How will consumers and firms respond to this disclosure requirement?• Will average calories/ meal consumed away from home decline?• Where else in the food system would nutrition information add value for consumers?
    37. 37. What is the role of food access and the local food environment in foodchoices and health outcomes?ACCESS
    38. 38. 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• Federal funds ($400 M) to improve access
    39. 39. 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
    40. 40. 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?• Would targeting individuals be more effective than targeting neighborhoods?
    41. 41. Will changes in standards for school lunch programs succeed inchanging children’s diets?STANDARDS
    42. 42. 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.
    43. 43. Evidence: School Lunch Standards• Mixed evidence about role of school lunch in childhood obesity• Healthier may cost 5 to 7% more• Little basis for long term assessment Sources: Meyerhoefer and Yang (2011); Newman, et. al (2009); Newman, 2011.
    44. 44. Behavioral Cues Show PotentialExperimentsconducted by Cornellresearchers revealbehavioral psychologycan be used toencourage children toeat more healthyfood. Source: Wansink, Just, and McKendry, Lunch Line Redesign, New York Times Op-Chart, 2010.
    45. 45. Research Needs• Will children eat differently? Will it change their long run eating habits?• Can behavioral cues alter food choice in institutional settings? What lessons do that offer for food choices in other settings?
    46. 46. What evidence does economic research provide?CONCLUSIONS
    47. 47. 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
    48. 48. 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
    49. 49. AAEA Economists Well Placed 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
    50. 50. Illustration by Meredith Nelson
    51. 51. Is this a healthy food environment? Illustration by Meredith Nelson
    52. 52. Acknowledgements: Elise Golan, Fred Kuchler, Ephraim Leibtag, GeraldNelson, Susan Offutt, Jay Variyam, and Shelly Ver Ploeg for valuablediscussions and comments. William Collier (IFPRI) and Aylin Kumcu (ERS)for research assistance. Meredith Nelson (meredith-nelson.com) forillustration and Sara Gustafson (IFPRI) for design.