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The Effects of Farm Commodity and Retail Food Policies on Obesity and Economic Welfare in the United States

  • Abigail M. Okrent
  • Julian M. Alston

Many commentators claim that farm subsidies have contributed significantly to the "obesity epidemic" by making fattening foods relatively cheap and abundant and, symmetrically, that taxing "unhealthy" commodities or subsidizing "healthy" commodities would contribute to reducing obesity rates. In this article we use an equilibrium displacement model to estimate and compare the economic welfare effects from a range of hypothetical farm commodity and retail food policies as alternative mechanisms for encouraging consumption of healthy food or discouraging consumption of unhealthy food, or both. We find that, compared with retail taxes on fat, sugar, or all food, or subsidies on fruits and vegetables at the farm or retail levels, a tax on calories would be the most efficient obesity policy. A tax on calories would have the lowest deadweight loss per pound of fat reduction in average adult weight, and would yield a net social gain once the impact on public health care expenditures is considered. Copyright 2012, Oxford University Press.

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Article provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.

Volume (Year): 94 (2012)
Issue (Month): 3 ()
Pages: 611-646

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Handle: RePEc:oup:ajagec:v:94:y:2012:i:3:p:611-646
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  1. Rickard, Bradley J. & Okrent, Abigail M. & Alston, Julian M., 2011. "How have agricultural policies influenced caloric consumption in the United States?," Working Papers 126543, Cornell University, Department of Applied Economics and Management.
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  10. Senauer, Benjamin & Gemma, Masahiko, 2006. "Why Is the Obesity Rate So Low in Japan and High in the U.S.? Some Possible Economic Explanations," Working Papers 14321, University of Minnesota, The Food Industry Center.
  11. Cash, Sean B. & Sunding, David L. & Zilberman, David, 2004. "Fat Taxes And Thin Subsidies: Prices, Diet, And Health Outcomes," 2004 Annual meeting, August 1-4, Denver, CO 19961, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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