The food police have argued amongst themselves for many years over how to change consumers' eating habits. Some have suggested that 'pricing strategies' (i.e. higher taxes) may change behavior while others say subsidies for healthy foods are the way to encourage people to eat fruits, vegetables and whole grains. The thought is that if you make it cheaper, people will eat more of it, more expensive and people will eat less.

To sort out the controversy, a team of researchers from the University of Buffalo set out to determine in the laboratory which method is best for dictating to consumers what's good for them, taxes on junk food or subsidies for healthy food. Their results appear this month in Psychological Science.

Researchers simulated a grocery store, "stocked" with images of everything from bananas and whole wheat bread to Dr. Pepper and nachos. A group of volunteers —all mothers— were given laboratory "money" to shop for a week's groceries for the family. Each food item was priced the same as groceries at a real grocery nearby, and each food came with basic nutritional information.

The mother-volunteers went shopping several times in the simulated grocery. First they shopped with the regular prices, but afterward the researchers imposed either taxes or subsidies on the foods. That is, they either raised the prices of unhealthy foods by 12.5%, and then by 25%; or they discounted the price of healthy foods comparably. Then they watched what the mothers purchased.

To define healthy and unhealthy foods, the scientists used a calorie-for-nutrition value, or CFN, which is the number of calories one must eat to get the same nutritional payoff. For example, nonfat cottage cheese has a very low CFN, because it is high on nutrition but not on calories; chocolate chip cookies have a much higher CFN. The researchers also measured the energy density- essentially calories- in every food.

The results show that taxes were more effective in reducing calories purchased over subsides. Specifically, taxing unhealthy foods reduced overall calories purchased, while cutting the proportion of fat and carbohydrates and upping the proportion of protein in a typical week's groceries. By contrast, subsidizing the prices of healthy food actually increased overall calories purchased without changing the nutritional value at all. It appears that mothers took the money they saved on subsidized fruits and vegetables and treated the family to less healthy alternatives, such as chips and soda pop. Taxes had basically the opposite effect, shifting spending from less healthy to healthier choices.

On the basis of this laboratory research, the scientists conclude that subsidizing broccoli and yogurt- as appealing as that idea might be to some- may be unlikely to bring about the sweeping social changes food cops desire; forcing consumers to pay artificially higher prices is the best way to do that.




Citation: Epstein et al., 'The Influence of Taxes and Subsidies on Energy Purchased in an Experimental Purchasing Study', Psychological Science, February 2010; doi: 10.1177/0956797610361446