Presented at the 2005 American Agricultural Economics Association Annual Meeting: Providence, RI, July 24, 2005. 41 pages.
Copyright 2005 by Christiane Schroeter, Jayson Lusk, and Wallace Tyner. All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies.
NOTE: At the time of publication, the author Christiane Schroeter was not yet affiliated with Cal Poly.
Despite the significant rise in obesity in the U.S., economic research on obesity is still in its infancy. This paper employs a microeconomic approach to investigate the effects of price and income changes on weight in an effort to determine how a high-calorie food tax, a low-calorie food subsidy, and/or income changes affect body weight. Although raising the price of high-calorie food will likely lead to decreased demand for such goods; it is not clear that such an outcome will actually reduce weight. The model developed in this paper identifies conditions under which price and income changes are mostly likely to actually result in a weight loss. The model is easily implemented using data on own- and cross-price elasticities that are often readily available from the extant literature. This is important because survey data that contain both economic information, such as food prices, and weight are extremely rare. Information on relationship between price and weight is critical in developing appropriate public policy and in determining when and where fat taxes, thin subsidies or income re-distribution will achieve the desired objective of reducing obesity.
Agribusiness | Agricultural and Resource Economics | Business