Enhancing and Restoring Safety & Quality Cultures - Dave Litwiller - May 2024...
Unnevehr Fellows Address
1. Food And Health:
Can Economics Contribute
to Improved Outcomes?
Laurian Unnevehr
Senior Research Fellow, IFPRI
AAEA Fellows Lecture
August 14, 2012
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. Do we have an “Obeso-genic” Food Environment?
Illustration by Meredith Nelson
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. Overview
• Costs and causes of obesity
• Public health policy recommendations
• Economic evidence and research needs
– Prices
– Information
– Access
– Standards
6. How much does rising obesity cost?
THE COSTS OF DIET RELATED
DISEASE
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. 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. What are the causes and what do they suggest about interventions?
CAUSES OF OBESITY
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. Calorie Intake Increased
20% over 20 years
U.S. per capita loss-adjusted food availability: Total Daily Calories
3,000
2,717
2,500
2,195
2,000
1,500
1,000
500
0
Source: USDA/ERS
15. Percent of Daily Calories from Different Food Groups
TWICE 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. Food Away from Home
Percent Calories
35
30 Every meal away from home
adds 134 calories compared with
25 a meal at home.
20
15
10
5
2005
0 1980
Food
Away Fast
From Food
Home
Sources: USDA/ERS from NHANES data; Todd et al. (2010)
17. % Overweight Adults Follows Caloric Intake Per Capita
Across Countries
4000
3500
Caloric 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. Summary: Obesity Causes
• Obesity rates are increasing
• Energy imbalance is a simple explanation
– Too many calories
– Too little activity
– Many structural reinforcements
19. What are the recommendations for action from the public health
community?
PROPOSED POLICIES
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. 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. 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
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. Evidence: Demand Simulations
Fruits and Vegetables Soda
10% 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. Evidence: Simulations of
Alternative Tax Policies
Tax 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. Evidence: Prices Explain Health
Outcomes
• Recent studies suggest that relative prices
explain variation in weight and disease
outcomes
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. Low-fat milk cheaper than soda in some US regions
Higher prices for
soda lead to
reduced BMI
in children.
Price of low-fat milk
relative to soda (Wendt and Todd
2011)
Source: USDA/ERS
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. How will consumers respond to new calorie information in restaurants?
INFORMATION
32. Nutrition Labels
• US packaged food
mandatory since 1993
• EU guidelines
• Private sector symbols
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. 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. 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. 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. What is the role of food access and the local food environment in food
choices and health outcomes?
ACCESS
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. 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. 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. Will changes in standards for school lunch programs succeed in
changing children’s diets?
STANDARDS
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. 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. 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.
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?
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. 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. 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
51. Is this a healthy food environment?
Illustration by Meredith Nelson
52. Acknowledgements: Elise Golan, Fred Kuchler, Ephraim Leibtag, Gerald
Nelson, Susan Offutt, Jay Variyam, and Shelly Ver Ploeg for valuable
discussions and comments. William Collier (IFPRI) and Aylin Kumcu (ERS)
for research assistance. Meredith Nelson (meredith-nelson.com) for
illustration and Sara Gustafson (IFPRI) for design.
Editor's Notes
“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.