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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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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 ( forillustration and Sara Gustafson (IFPRI) for design.