Taxes more effective than subsidies for reducing calories, suggests study

The concept of taxing less healthy foods and beverages, such as candy and soda, has been stirring up controversy across the United States as policy makers look for ways to reduce the nation’s high incidence of obesity. It is estimated that the US spends $147bn on obesity-related illness every year, but critics of a so-called ‘sin tax’ have said it would unfairly target a single industry and could further weaken a struggling economy. Some have suggested that subsidizing healthier foods, like fruits, vegetables and whole grains, could be a more effective policy to change eating habits.

However, the authors of this latest study found: “Taxing less healthy foods with low nutrient density reduced energy (caloric) intake, while reducing the proportion of fat and increasing the proportion of protein purchased.”​

On the other hand, they found that the most calories were purchased with the highest level of subsidy, saying that it seemed the study’s subjects took the money they saved on healthier foods and used it to purchase less healthy ‘treats’.

Shopping simulation​

The study took place in a laboratory environment designed to simulate a grocery store, with 42 mothers given a study income of $22.50 per family member to spend. They were instructed to choose between a stock of food picture cards, which came with basic nutritional information. Food prices were aligned to current prices at local grocery stores.

The volunteers went shopping several times in the simulated store, first with regular prices and then with taxes and subsidies applied. The researchers raised the price of high-calorie for nutrient (HCFN) foods – such as cookies and sugary soft drinks – by 12.5 percent and then 25 percent; and then lowered the price of low-calorie for nutrient (LCFN) foods – such as vegetables and wheat bread – by 12.5 percent and then 25 percent.

“The results provide stronger support for taxes than for subsidies as a means of reducing consumption of less healthy foods and increasing consumption of healthier alternatives,”​ the authors wrote. “…Taxing foods had the dual benefit of reducing purchases of HCFN foods while increasing purchases of LCFN foods with lower energy density. From a public-policy standpoint, this strategy had the additional benefit of generating significant tax revenue.”​

The authors stressed that although helpful, the results would need to be replicated outside of the laboratory to be able to draw conclusions about the actual impact of food price changes and their relationship to food consumption patterns.

Source: Psychological Science​

Published online February 5, DOI: 10.1177/0956797610361446

“The Influence of Taxes and Subsidies on Energy Purchased in an Experimental Purchasing Study”​

Authors: Leonard H. Epstein, Kelly K. Dearing, Lora G. Roba, and Eric Finkelstein.