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How Distorted Food Prices Discourage a Healthy Diet
Authors: Roberto Pancrazi, Thijs van Rens and Marija Vukotic
Abstract: Public policy-making for the prevention of diet-related disease is impeded by a lack of evidence on whether poor diets are a matter of personal responsibility or a choice set narrowed by environmental conditions. An important element of the environment are market imperfections in food retail that distort prices. We use a rich dataset on quantities and prices of food purchases in the US and a structural model of dietary choices to examine variation in diets across household that have different levels of income and live in different neighborhoods. We find that price distortions account for one-third of the gap between the recommended and actual intake of fruits and vegetables. A feasible fiscal intervention that remedies these distortions makes all consumers better off.
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