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

Author

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  • Okrent, Abigail M.
  • Alston, Julian M.

Abstract

Many commentators have claimed 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 paper 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 fruit and vegetables at the farm or retail, a tax on calories would be the most efficient as 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, whereas the other policies typically would involve significant net social costs.

Suggested Citation

  • Okrent, Abigail M. & Alston, Julian M., 2011. "The Effects of Farm Commodity and Retail Food Policies on Obesity and Economic Welfare in the United States," Working Papers 162516, Robert Mondavi Institute Center for Wine Economics.
  • Handle: RePEc:ags:mondwp:162516
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    References listed on IDEAS

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    1. Nicholas E. Piggott, 2003. "Measures of precision for estimated welfare effects for producers from generic advertising," Agribusiness, John Wiley & Sons, Ltd., vol. 19(3), pages 379-391.
    2. Okrent, Abigail M. & Alston, Julian M., 2011. "Demand for Food in the United States: A Review of Literature, Evaluation of Previous Estimates, and Presentation of New Estimates of Demand," Monographs, University of California, Davis, Giannini Foundation, number 251908, December.
    3. Bradley J. Rickard & Abigail M. Okrent & Julian M. Alston, 2013. "How Have Agricultural Policies Influenced Caloric Consumption In The United States?," Health Economics, John Wiley & Sons, Ltd., vol. 22(3), pages 316-339, March.
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    8. Okrent, Abigail M. & Alston, Julian M., 2010. "The Demand for Food in the United States: A Review of the Literature, Evaluation of Previous Estimates, and Presentation of New Estimates of Demand," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61674, Agricultural and Applied Economics Association.
    9. Smith, Travis A. & Biing-Hwan, Lin & Lee, Jonq-Ying, 2010. "Taxing Caloric Sweetened Beverages: Potential Effects on Beverage Consumption, Calorie Intake, and Obesity," Economic Research Report 95465, United States Department of Agriculture, Economic Research Service.
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    Citations

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    Cited by:

    1. Julian M. Alston & Joanna P. MacEwan & Abigail M. Okrent, 2016. "Effects of U.S. Public Agricultural R&D on U.S. Obesity and its Social Costs," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 38(3), pages 492-520.
    2. repec:ags:remeag:163036 is not listed on IDEAS
    3. Will Martin, 2017. "Agricultural Trade and Food Security," Policy notes & Policy briefs 1744, OCP Policy Center.
    4. Alston, Julian M. & Okrent, Abigail M. & Parks, Joanna, 2013. "Effects of U.S. Public Agricultural R&D on U.S. Obesity and its Social Costs- Revised," Working Papers 162530, Robert Mondavi Institute Center for Wine Economics.
    5. repec:ags:remeag:163039 is not listed on IDEAS
    6. Ferrier, Peyton & Zhen, Chen & Bovay, John, 2016. "Cost Pass Through and Welfare Effects of the Food Safety Modernization Act," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 252861, Agricultural and Applied Economics Association.
    7. Alston, Julian M. & Pardey, Philip G., 2014. "Agricultural R&D, Food Prices, Poverty and Malnutrition Redux," Staff Papers 162413, University of Minnesota, Department of Applied Economics.
    8. Okrent, Abigail M. & Alston, Julian M., 2011. "Demand for Food in the United States: A Review of Literature, Evaluation of Previous Estimates, and Presentation of New Estimates of Demand," Monographs, University of California, Davis, Giannini Foundation, number 251908, December.
    9. repec:ags:remeag:163037 is not listed on IDEAS
    10. Chavas, Jean-Paul, 2013. "On the microeconomics of food and malnutrition under endogenous discounting," European Economic Review, Elsevier, vol. 59(C), pages 80-96.
    11. repec:ags:aare13:148420 is not listed on IDEAS
    12. repec:ags:remeag:163038 is not listed on IDEAS
    13. McKendree, Melissa G.S. & Tonsor, Glynn T. & Schroder, Ted C. & Hendricks, Nathan P., 2017. "Changing Impacts of Beef Demand on Cattle Producers," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252730, Southern Agricultural Economics Association.
    14. Liaukonyte, Jura & Rickard, Bradley J. & Kaiser, Harry M. & Richards, Timothy J., 2010. "Evaluating advertising strategies for fruits and vegetables and the implications for obesity in the United States," Working Papers 126972, Cornell University, Department of Applied Economics and Management.
    15. Karl Aiginger, 2016. "New Dynamics for Europe: Reaping the Benefits of Socio-ecological Transition. Synthesis Report Part I," WWWforEurope Deliverables series 11, WWWforEurope.
    16. repec:oup:apecpp:v:39:y:2017:i:3:p:387-406. is not listed on IDEAS
    17. Okrent, Abigail & Sweitzer, Megan, 2016. "Obesity as a Modifier of Price Sensitivity in the United States," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 236251, Agricultural and Applied Economics Association.

    More about this item

    Keywords

    Agricultural and Food Policy; Consumer/Household Economics; Food Consumption/Nutrition/Food Safety;

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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