Will sin taxes and subsidies improve healthy dietary choices?
I have discussed both sin taxes and the increasing obesity epidemic in the article entitled “Food for Thought: Tax on Body Weight“. Ever expanding waistlines will have a major impact on the health care costs of the future if we do not find a solution. It will also have a lasting impact on the quality of life for Americans whether you are obese or not because of the increase in taxes to fund the health care of those who will be unable to work. Interventions such as taxes will absolutely increase food prices but will the increasing food prices lead to reduced purchasing of unhealthy foods and thus improve dietary choices?
I recently read a prospective meta-analysis that looked at 30 studies on this very topic. The study looked at 11 previous studies that focused on the higher costs of food and 19 studies that examined lower costs of food. Of course, the lower cost will be subsidies on healthy choices and the higher cost would represent taxes on unhealthy choices.
What effect does a tax on unhealthy choices have? The meta-analysis revealed that for every 10% increase in cost, there was a 7% decrease in the intake of sugary beverages and a 3% decrease in fast food and an overall decrease in unhealthy choices of 9%. I hazard to guess why the difference in the two. BMI was not significantly affected.
What effect does the subsidy have on making healthy choices? The results revealed that for every 10% decrease in cost, there was a 14% increase in fruit and vegetable consumption and 16% increase in other healthy food choices for a total increase in healthy choices of 12%. Most notably, there was also a significant reduction in BMI by 0.4 kg/m2.
The Bottom Line: This study points to an area in need of further study. The study indicates that subsidies and taxes will encourage purchases we want and discourage the ones we don’t. I still stand by the point of my original post on soda taxes because taxes are likely to hurt the poor and middle classes more. Often, we package sin taxes as a way to fund the health care for the “sinners”, but it is often caught in the bureaucracy and rarely makes it where it needs to go. A subsidy, on the other hand, might make sense if done correctly. You can also read another view on this research on Science Daily.