1. Food And Health:Can Economics Contribute to Improved Outcomes?Laurian Unnevehr Senior Research Fellow, IFPRIAAEA Fellows Lecture August 14, 2012

2. Introduction Rising rates of obesity and associated medicalcosts bring policy debate Food environment approach has drivenpolicy debate Economists have much to offer but are late todebate 3. Do we have an Obeso-genic Food Environment? Illustration by Meredith Nelson 4. Three Economic Perspectives Health Economics: Value of improved healthand extended life is large Neo-classical Economics: Seeks market failureand weighs benefits against costs Behavioral Economics: Altruistic paternalismto 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 RELATEDDISEASE 7. U.S. Body Mass Index Distribution is Shifting Up 8. Rising U.S. Childhood Obesity% of children 25 20 1519802000 102008 5 0All2-5 yrs 6-11 yrs 12-19 yrs 9. Overweight and Obesity are More Common Around the World Source: WHO 10. U.S. Obesity and Overweight Direct Costs Healthcare direct costs estimated at $210billion in 2008$ Half are paid through Medicare or Medicaid One-fifth of total health care costs Combined dynamic of rising health care costsand 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 overnutritionexceed those from undernutrition Diet related disease has a global costestimated 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 gettingenough physical activity. Body weight is the result ofgenes, metabolism, behavior, environment, culture, and socioeconomic status Behavior and environment play a large rolecausing people to be overweight and obese. 14. Calorie Intake Increased20% over 20 yearsU.S. per capita loss-adjusted food availability: Total Daily Calories3,000 2,7172,5002,1952,0001,5001,000 500 0Source: USDA/ERS 15. Percent of Daily Calories from Different Food GroupsTWICE the recommended amount CaloricMeat, Eggs, and Sweeteners Nuts Dairy Added Fats andOils and DairyFatsFruitVegetablesFlour and Cereal ProductsLess than HALF therecommendedamount Source: USDA/ERS 16. Food Away from Home Percent Calories3530 Every meal away from home adds 134 calories compared with25 a meal at home.201510 52005 0 1980FoodAwayFastFromFoodHome Sources: USDA/ERS from NHANES data; Todd et al. (2010) 17. % Overweight Adults Follows Caloric Intake Per CapitaAcross Countries 4000 3500Caloric Intake (Kcal/Person/Day)Egypt 3000 Indonesia 2500Nicaragua 2000High Income ZambiaMiddle Income 1500 Low Income0 102030 4050 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 healthcommunity?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 /2011workplace meals Tax unhealthy/ subsidizehealthy foods 21. IOM Childhood Obesity Report 2009 Attract supermarkets to underservedneighborhoodsNow Calorie labeling in chain restaurants FederalPolicy Nutrition standards for foods served tochildren Tax to discourage foods of little value Media campaign 22. What is the Economic Evidence forInterventions? Prices of foodsInfluence individual choice Information in restaurants Access to retail outlets Influence choice architecture Standards in school lunch 23. How do consumers respond to changes in food prices?FOOD PRICES 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 SNAPredemption experiment underway Danish fat tax Flat rate of $1.29 per lb of saturated fat 25. Evidence: Demand SimulationsFruits and VegetablesSoda10% price16% lessdrop5% more20% taxconsumed consumedVery modesteffects oncaloriesor weight. Sources: Dong and Lin (2009); Andreyeva et al. (2010); Dharmasena and Capps (2012) 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 taxefficient 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 taxreduction in health carecosts Source: Miao, Beghin, and Jensen, 2011Source: Okrent and Alston, 2012 27. Evidence: Prices Explain HealthOutcomes Recent studies suggest that relative pricesexplain variation in weight and diseaseoutcomes 28. Green Vegetables Relative Price to Starchy Vegetables Varies Across U.S. Higher prices for vegetables increases diabetes incidence andmedical expendituresDark Green Vegetables Price Percent (Meyerhoefer andAbove Starchy Vegetables Leibtag 2010) Source: USDA/ERS 29. Low-fat milk cheaper than soda in some US regionsHigher prices forsoda lead toreduced BMIin children.Price of low-fat milkrelative to soda(Wendt and Todd2011) Source: USDA/ERS 30. Research Needs How do prices shape long run demand? What would reduce the relative prices ofhealthy alternatives? Could agricultural research investments bealtered to support healthy diets? 31. How will consumers respond to new calorie information in restaurants?INFORMATION 32. Nutrition Labels US packaged foodmandatory 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 byconsumers 34. Evidence: Consumer Response toMenu Calorie Labels Only modest calorie reductions Framing, defaults, and type of signal matterCan alter competitive position in market Results echo those for food product labelsSources: Downs et al. (2009); Bollinger et al. (2011); Nelsonand McCluskey (2010); Ellison, et al. (2011) 35. Evidence: Information InfluencesSupply Mandatory labeling motivates food producersto change product formulation Trans fat label in 2006 led to rapid substitutions inmajor brands Benefits all consumers whether they read thelabel or not CDC reports reduction in trans fat in blood in 2009 Menu labels likely to lead to reformulation inrestaurant offerings Sources: Golan and Unnevehr 2009; CDC 2012. 36. Research Needs How will consumers and firms respond to thisdisclosure requirement? Will average calories/ meal consumed awayfrom home decline? Where else in the food system would nutritioninformation add value for consumers? 37. What is the role of food access and the local food environment in foodchoices 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 inadequateaccess (ERS 2009) Fast food access close to schools increaseschild obesity (Currie 2010) Retailer commitments to Lets Move initiative 40. Research Needs What determines food retailer decisions aboutlocations? About quality and scope of healthyfoods offered? How does access shape purchases? For whatkinds of households is access important? Would targeting individuals be more effectivethan targeting neighborhoods? 41. Will changes in standards for school lunch programs succeed inchanging childrens diets?STANDARDS 42. Policies for School Lunch Standards 22 million children in USDA school lunchprogram 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 inchildhood obesity Healthier may cost 5 to 7% more Little basis for long term assessmentSources: Meyerhoefer and Yang (2011); Newman, et. al (2009); Newman, 2011. 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. Research Needs Will children eat differently? Will it changetheir long run eating habits? Can behavioral cues alter food choice ininstitutional settings? What lessons do thatoffer for food choices in other settings? 46. What evidence does economic research provide?CONCLUSIONS 47. Expected Policy Impacts Access, information, standards interventions: Likely modest positive effects on energyimbalance Likely benefits > costs Limitations for addressing obesity are clear, sofurther debate on appropriate public role 48. Three Economic Perspectives Health Economics: Current trends projecthigh potential value of improving diet Neo-classical Economics: Can be moreefficient in achieving any target; benefits andlimits to price & information policies Behavioral Economics: Choice architectureapproach suggests new interventions butscope unclear 49. AAEA Economists Well Placed ToAnswer Important Questions How ag / food system contributes to healthoutcomes How to reduce relative prices of healthy foods Ag research portfolio to support betterdiets, more nutritious food Understanding firm behavior Product offerings space and quality Opportunities, limits for self-regulation New data expands our abilities 50. Illustration by Meredith Nelson 51. Is this a healthy food environment?Illustration by Meredith Nelson 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.