Ekaterina Mikhaylova/Shutterstock
As controversial as they are, taxes on unhealthy products such as sugary drinks can be effective in getting people to stop buying them, data suggest. (To learn more, read “Soda taxes could help Americans tackle their sugar addiction.”) Levying surcharges on other foods that health policymakers want to curb the public’s consumption of might also work, according to researchers tapping into data from Chicago Booth’s Kilts Center for Marketing.
Specifically, they find that higher prices on cookies, chips, frozen pizza, and other “vice” foods are more likely to discourage purchases by people at risk for obesity than other people. They suggest that health policymakers could consider broadening taxes on such foods knowing that the higher prices may have a greater effect on this group.
The researchers use the term vice to describe foods “that are tempting and purchased impulsively.” They define virtue foods in the study as including apples, carrots, packaged salads, dry beans, rice, eggs, and bottled water. These are terms and definitions borrowed from behavioral science.
The American Medical Association recognized obesity as a disease in 2013. Obesity involves complex factors that go beyond the behavioral; there are genetic, environmental, social, physiologic, and economic components that scientists don’t fully understand yet and doctors are still figuring out how best to treat and address. One thing is for sure: it is not linked to morality the way vice and virtue may imply.
To complicate things further, the tool doctors have been using to measure obesity, and which the researchers employ in this study, the body mass index, is considered by the AMA to be unsatisfactory, as it fails to account for differences in body composition based on sex, ethnicity, race, and age.
And yet, there’s little question that the disease is concerning to public-health experts. About 42 percent of Americans are obese, and obesity is linked to heart disease, strokes, diabetes, fatty liver disease, and certain cancers.
The researchers, University of Illinois’s Ying Bao, University of Toronto’s Matthew Osborne, University of Massachusetts, Amherst’s Emily Wang, and Penn State’s Edward C. Jaenick, set out to test the effects of taxing vice foods, and were surprised, they say, to find a stronger reaction from the high BMI group over the general population. They measured the effects by tracking how consumers reacted to price swings in the vice and virtue categories using three data sets from 2010 to 2015: NielsenIQ Consumer Panel Data, which tracks US household purchases from grocery stores and other retailers; NielsenIQ Retail Scanner Data, which gauges weekly quantities of products sold and their prices; and the Circana MedProfiler health survey, which collects information including people’s self-reported weight, height, and diet and exercise habits.
A hypothetical 10 percent increase in the price of unhealthy foods caused purchases to fall, according to the researchers’ estimates. In every category studied except ice cream, purchase volume declined more for individuals with a higher score for body mass index.
The study focused on 7,000 individuals aged 20–65 whose BMIs were calculated from their reported height and weight. Thirty-eight percent had a BMI that put them into the obese category; 32 percent were considered overweight; 28 percent scored as being at a healthy weight range; and 2 percent were underweight, the researchers report.
Linking BMI scores to purchasing behavior as tracked by the NielsenIQ data sets, the researchers measured consumer demand and price sensitivity for 10 vice and 10 virtue foods. They then used the results to estimate consumer response to a hypothetical 10 percent increase in prices of vice foods.
The researchers find that consumers with a BMI score that would suggest obesity had a higher level of demand for vice foods in general and a higher sensitivity to price swings than those with lower BMI scores. Thus, while price increases curb consumption of unhealthy foods for consumers across the BMI spectrum, those in the obesity group are even more likely to stop buying those items, the researchers find.
A 10 percent tax on such foods would have a larger effect on the obese population, and they might consume fewer calories overall, the study demonstrates. At the same time, consumers with higher BMI scores were no more or less sensitive to price increases on virtue (or what the researchers also call “nonvice”) foods than those with lower weights.
The study doesn’t explain the effect, but the authors highlight previous research suggesting that ads for less healthy foods might appeal most to consumers with lower inhibitions, which could be related to weight gain. When prices of such foods rise, these consumers may be more likely to notice and respond.
Ultimately, the findings support the idea that taxes on less healthy foods could slow consumption, the researchers suggest. To the extent that diet plays a large role in obesity, such taxes are more likely to help curb the disease among those who already have high BMI scores rather than prevent it among those who don’t, they find, as consumers with high BMIs are already more price-sensitive for those foods.
The researchers acknowledge that they did not take into account the possibility that consumers might replace a pricey unhealthy food with one that is less expensive. However, they write, “our exercise suggests that if substitution effects are small, then levying such a tax on vice categories could potentially be an effective approach to curbing growth in obesity.”
Ying Bao, Matthew Osborne, Emily Wang, and Edward C. Jaenicke, “BMI/Obesity and Consumers’ Price Sensitivity: Implications for Food Tax Policies,” PNAS Nexus, forthcoming.
New York University’s Jonathan Haidt discusses the effects of childhoods spent under the influence of smartphones and overprotective parenting.
Capitalisn’t: The Economic Costs of a Phone-Based Childhood
A company that plugs its past can alienate those who were previously marginalized.
Celebrating Corporate History Can Backfire
Chicago Booth’s Richard Hornbeck discusses research that finds emancipation created huge economic value.
An Economist Debunks ‘Gone with the Wind’Your Privacy
We want to demonstrate our commitment to your privacy. Please review Chicago Booth's privacy notice, which provides information explaining how and why we collect particular information when you visit our website.