Assessing the effect of changes in relative food prices and income on obesity prevalence in the United States

Several empirical papers in the economics of obesity literature find that changes in aggregate food prices over time have little effect on the population's body-mass index or prevalence, while changes in the price of selected food items drastically affects what people eat. The purpose of this research is to further examine the impact of changes over time in food prices and household real income on individuals' food choices and weight using a calibrated static model. Our first objective is to contribute to the debate about the impact of food prices and household real income on weight and food choices using a different modeling strategy. We ask how much of the increase in calories consumed away from home as well as changes in weight for men and women between 1971 and 2006 can be accounted for by changes in food prices and household real income. A second and perhaps even more critical objective is to use economic theory and available evidence from medical research on obesity to look inside the black box of how people make eating decisions. After careful calibration of the model, we find that prices determine the allocation of calories across food types, while income determine the total number of calories consumed and thus individuals' weight. Based on our results, we share the view that taxes on food will impact what people eat but will have limited effect on reducing the population body-mass index or the obesity prevalence.