- Price Gouging Laws Are Knowledge Embargoes That Should Be Repealed - September 3, 2019
- Free Market Think Tank Crackdown Is A Setback For Freedom - August 30, 2019
- Trade With China Benefits American Consumers - August 12, 2019
People with higher incomes eat healthier diets than people with low incomes. Why? Some people blame “food deserts” without grocery stores and, therefore, little access to fresh fruits and vegetables and other healthy foods. A paper by Hunt Allcott, Rebecca Diamond, Jean-Pierre Dube, Jessie Handbury, Ilya Rahkovsky, and Molly Schnell forthcoming in the Quarterly Journal of Economics (available here, possibly gated for nonsubscribers; an open-access version is here) estimates that only about 10% of the gap is due to a low supply of healthy food while the other 90% is due to consumer demand.
In other words, food buyers, not food sellers, are the ones calling the tune, and policies designed to eliminate food deserts likely won’t do much to close the gap between the nutritional outcomes of the rich and the nutritional outcomes of the poor. While they acknowledge that their study does have important limitations, they “conclude that policies aimed at eliminating food deserts likely generate little progress toward a goal of reducing nutritional inequality.”
Dollar stores and drug stores that trade lightly (if at all) in fresh fruits and vegetables, lean meats, and other healthy options have become recent culprits du jour, but as these scholars note, it’s not because of the local food environment. They point out that people already travel to shop at grocery stores, so grocery store entry doesn’t do much to change people’s eating habits. They also look at people moving and show that moving people from places without grocery stores to places with them doesn’t close the gap very much.
How do they know? They use data from the Nielsen Homescan Panel to examine the food and drink purchases of some 169,000 unique households between 2004 and 2016. While the data have some important limitations (they don’t include restaurant purchases, for example), they provide valuable information about people’s purchasing habits that help the researchers do a few “what if” exercises, like asking “what if people in different income quartiles faced the same selection and prices”? They learn that this wouldn’t do much to close the nutrition gap.
So what would? The team notes that education, and better nutritional information specifically, looks like plausible candidates. They point out that their estimates of the correlations between education, nutritional information, and the health gap are just correlations and not credible causal estimates, but even then, the correlations suggest a good place to start looking.
Replacing some of the things policymakers are already doing with subsidies for healthier foods would be another option. They argue specifically that “an annual subsidy of $84 milli0n would increase healthy eating by the same amount as one additional supermarket entry within a 10-minute drive of all bottom-quartile households” and then note that this compares favorably with supply-side policies like the Healthy Food Financing Initiative, which “has spent about $220 million of its $400 million budget on store subsidies” while “various state programs have spent tens of millions.”
They argue that about $11 billion per year in means-tested subsidies for low-income consumers of high Health Index foods “could raise bottom-quartile households’ Health Index all the way to the level of top-quartile households.” Not bad, given that this is only about 15% of the current budget of SNAP (the Supplemental Nutrition Assistance Program), and I suspect that it could probably be accomplished by reallocating current spending rather than with new spending.
Healthy foods are also what economists call “normal goods,” meaning that people buy more of them as their incomes increase. This suggests that better nutrition might be one of the salutary effects of a redistribution program like the one proposed by Bucknell University economist Marcellus Andrews (which I discuss here).
The authors suggest that some experiments trying some of these things out might be warranted, but they are careful to note that they haven’t identified any magic bullets, and the policies economists can dream up in our offices are not always what emerges after our ideas go through the political funhouse. And all of this, of course, assumes that there is a compelling, market failure-based justification for closing the nutrition gap beyond simply “people with low incomes make choices I find unlovely.”
Importantly, the study identifies the sources of nutritional inequality and finds that they are on the demand side rather than the supply side. This suggests that if your city is looking to fight nutritional inequality by limiting dollar stores–as Birmingham is–they won’t accomplish much and should look elsewhere.
[Originally Published at Forbes]