Biing-Hwan Lin Senior Economist, Food Economics Division, USDA/ERS Presentation at 中正大學經濟系 May 12, 2011 Do Taxes and Subsidies Improve Diet and Health?
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Slide 1
Biing-Hwan Lin Senior Economist, Food Economics Division,
USDA/ERS Presentation at May 12, 2011 Do Taxes and Subsidies
Improve Diet and Health? 1
Slide 2
Overweight and Obesity Prevalence in the U.S. 1988-94,
1999-2000, 2007-2008 Source: National Health and Nutrition
Examination Survey, CDC 2
Slide 3
Weight Gains Reflect Energy imbalance We take in more calories
than we expand 3
Slide 4
Rising Calorie Intakes: 1977 to 2006 Sources: 1977-78 NFCS,
1989-91 and 1994-98 CSFII, USDA; 2003-6 NHANES, CDC 4
Slide 5
Trend in Beverage Consumption in the US Sources: 1977-78 NFCS,
1989-91 and 1994-98 CSFII, USDA; 1999-2004 NHANES, CDC. 5
Slide 6
Sources of Calories In the US Sources: 1977-78 NFCS, 1989-91
and 1994-98 CSFII, USDA; 2003-6 NHANES, CDC 6
Slide 7
Will Eat More Fruits and Vegetables Help? US Average
Recommendations (cups) Vegetables2.60 Fruits1.80 Average Daily
Intake (cups) [% of recommendation] Vegetables1.58 [61%] Fruits1.03
[57%] Source: 1999-2002 NHANES, CDC Fruits and vegetables are rich
in water and fiber, low in energy density Eating more fruits and
vegetables promote satiety and decrease energy intake 7
Slide 8
New Release: Food Marketing Institute (October 8, 2010) FMI
Grocery Shopper Trends 2010: Consumers are Savvy and Informed
Bargain Hunters When it Comes to Grocery Shopping 8
Slide 9
Pricing policies to improve diet: Two case studies 9 Taxing
Caloric Sweetened Beverages (CSB) Subsidizing fruits, vegetables,
and milk Approach Estimate food demands to obtain demand
elasticities Apply the elasticities to intake data to examine
potential effects of pricing policies
Slide 10
Taxing Caloric Sweetened Beverages: Potential Effects on
Consumption, Calorie Intake, and Obesity. ERS report by Smith, Lin,
and Lee, 2010 The Effects of a Sugar-Sweetened Beverage Tax:
Consumption, Calorie Intake, Obesity, and Tax Burden by Income.
AAEA 2010 presentation by Lin, Smith, and Lee Measuring Weight
Outcomes for Obesity Intervention Strategies: The Case of a
Sugar-Sweetened Beverage Tax. Working paper by Lin, Smith, Lee, and
Hall 10
Slide 11
Beverage Demand 11 Separation of CSBs and their diet
counterparts CSB (sodas, fruit drinks, sports and energy drinks,
and powdered mixes) Potential CSB substitutes and complements Diet
drinks Milk (skim, low-fat, and whole) 100% fruit/vegetable juices
Coffee/teas Bottled water
Slide 12
Nielsen National Consumer Panel, 1998-2007 (Purchase data for
demand estimation) 12 Household purchases of groceries scanned at
home Quantity, expenditure, and demographics CDC National Health
and Nutrition Examination Survey, 2003-6 (Consumption data for
intake analysis) 24-hr dietary recall Comprehensive physical,
including weight and height
Slide 13
Beverage Consumption, 2003-6 13 AdultsChildren
Low-incomeHigh-incomeLow-incomeHigh-income Beverages:
--------------------------- Calories per day
--------------------------- Sugary drinks197136189195 Diet
drinks2311 Skim milk613614 Low-fat milk37 6485 Whole milk37167938
Juices38356350 Tea/Coffee20281110 Bottled water0000 Total beverage
kcal 337269411394 Source: ERS calculation of 2003-06 National
Health and Nutrition Examination Survey (NHANES), first-day intake
data.
Slide 14
Effect of soda tax on calorie intake and body weight -1.292
-0.591 0.344 0.227 -0.054 0.529 -0.185 1.005 -1.292 -0.591 0.344
0.227 -0.054 0.529 -0.185 1.005 (A) Elasticity High income (A)
Elasticity High income (B) Elasticity X 20% tax (B) Elasticity X
20% tax Percent -25.84 -11.82 6.88 4.54 -1.08 10.58 -3.70 20.10
Percent -25.84 -11.82 6.88 4.54 -1.08 10.58 -3.70 20.10 kcal/day
-55.8 kcal 0.0 5.5 0.0 11.4 -0.1 0.0 kcal/day -55.8 kcal 0.0 5.5
0.0 11.4 -0.1 0.0 (D) Change in individual daily intake (D) Change
in individual daily intake Beverages Sugary drinks Diet drinks Skim
milk Low fat milk Whole milk Juices Coffee/tea Bottled water
Beverages Sugary drinks Diet drinks Skim milk Low fat milk Whole
milk Juices Coffee/tea Bottled water 38.5 kcal/day 38.5 kcal/day
-14,053 kcal/yr -14,053 kcal/yr -4.0 lbs/yr -4.0 lbs/yr (E)
Reduction in calories and weight (E) Reduction in calories and
weight kcal/day 216 kcal 0 122 0 112 2 0 kcal/day 216 kcal 0 122 0
112 2 0 (C) Individual daily intake (C) Individual daily intake
Example: A 510 man weighing 175 pounds would have a BMI of
25.1overweight. He drinks a 12 oz. of cola, 8 oz of fruit drink, 8
oz of 2% milk, 8 oz of orange juice, and 8 oz of unsweetened brewed
tea. After the tax, other things being equal, the adult male trims
off 4.1 pounds and reduces BMI to 24.5normal weight. 14
Slide 15
Estimated Calorie Effects 15 Changes in consumption
(kcal/day):AdultsChildren High Income Sugary drinks-35.2-50.3 All
beverages-33.3-44.7 Low Income Sugary drinks-37.5-35.8 All
beverages-36.8-33.1
Slide 16
Estimated Weight Effects: by income 16 Changes in prevalence
(%):AdultsChildren High Income Overweight Before Tax67.630.5
Overweight After Tax63.424.5 Obesity Before Tax33.015.0 Obesity
After Tax30.212.0 Low Income Overweight Before Tax65.134.2
Overweight After Tax61.129.9 Obesity Before Tax35.017.8 Obesity
After Tax32.215.4
Slide 17
Static rule of 3500 kcal = 1 pound widely applied, but
over-estimates weight outcome 3500 calories are based on a fixed
body composition75% fat and 25% lean tissue Body composition varies
by age, gender, race/ethnicity, and body weight Weight loss is
dynamic because energy requirement depends on many factors,
including body weight An initial reduction of energy intake results
in weight loss, which in turn reduces the energy requirement and
hence weight loss slows down over time. 17
Slide 18
Weight loss simulations: static vs. dynamic 18
Slide 19
Subsidize purchase of healthy food: fruits, vegetables, and
milk 19 ECONOMIC INCENTIVES FOR DIETARY IMPROVEMENT AMONG FOOD
STAMP RECIPIENTS Lin, Yen, Dong, and Smallwood. Contemporary
Economic Policy, 2010,28(4): 524-36
Slide 20
19992002 food intakes, compared with 2005 Dietary Guidelines
Food Stamp Recipients Average Recommendations (cups) Vegetables2.37
Fruits1.68 Milk products2.65 Average Daily Intake (cups) [% of
recommendation] Vegetables1.26 [53%] Fruits0.89[53%] Milk
products1.39 [53%]
Slide 21
Data Used 21 USDA National Food Stamp Program Survey 1996-7,
which has household food use records (quantity and expenditure)
National Health and Nutrition Examination Survey 1999- 2002, which
has a 24-h recall of food intake at home and away from home
Slide 22
Selected own- and cross-price elasticities 22
MilkVegetablesNon-juice fruits Juice Milk-0.79-0.30-0.120.01
Vegetables-0.02-0.72-0.00-0.02 Non-juice fruits-0.13-0.02-0.810.01
Juice0.010.070.01-1.17
Slide 23
Price subsidy 23 Assumptions Price is subsidized by 10% Subsidy
applied to food purchased at grocery stores Subsidy applied to
fruits, vegetables, and fluid milk as is, not mixtures
Slide 24
Quantity Responses to 10% price subsidy (Food stamp Recipients)
24 BeforeRecomdAfter At home Total At home Total Vegetables (cups)
0.941.262.371.001.33 Fruit (cups) 0.690.891.680.770.97 Dairy (cups)
1.091.392.651.161.45
Slide 25
Summary 25 In general, food demand is known to be own-price
inelastic for broadly defined food categories First Fundamental
Theorem of Taxation: a tax has little effect on inelastic goods As
we disaggregate food groups, food demands tend to become more
own-price elastic because of the influences of substitutes and
complements To simulate the effects of pricing policies on diet and
health, it is inappropriate to rely exclusively on the own-price
elasticities. Cross-price effects have to be incorporated.