VoxEU Column Health Economics

Obesity’s on the rise – let’s have the courage to tax junk food!

Obesity is a becoming a major health problem in Europe and it's driven to some extent by rising junk food consumption. Junk food has negative externalities and recent research finds that its demand is fairly elastic. If it is so natural to tax cigarettes, why not tax junk food as well?

Obesity has become a major public health problem. We know that one of its primary causes is the consumption of too many calories, many of which hide in sodas, chocolate bars, chips, pizzas and hamburgers. We also know that high consumption of junk food is linked to its modest price and that when its price goes up, purchases drop significantly. The conclusion is clear: these products must be taxed specifically, to reduce their consumption and encourage their producers to come up with healthier foods that won’t be taxed!

This measure, no doubt, won’t be very popular, but the situation is sufficiently alarming to take political risks. In the last five years, obesity among adults in France has gone from 8% to 11%; and among children and adolescents, there’s been an increase from 2% to 4%, with 25% of overweight children in low-income families. This is a trend that can be seen in most western European countries – Europeans are gaining weight as in the US, but a few years behind the US curve. Looking at the current situation in the US as a predictor for future situations in Europe provides an important wake-up call; obesity affects 30% of the US adult population!

Obesity poses health risks: cardiovascular problems, type-2 diabetes, hypertension, and respiratory and musculoskeletal problems. Estimates already put the cost of obesity-related illnesses in France at over €800m per year, without counting the indirect costs of missed work and loss in productivity. And all this from obesity figures that are just a start compared to American figures.

Agribusiness industrials have long put forth the link between an overly sedentary lifestyle and the occurrence of overweight, which diminished their responsibility. Obesity, certainly, doesn’t have only one cause. But a study, conducted over 3 years on food purchases of over 20,000 people, has just unequivocally linked the consumption of calories and weight gain: eating an extra 150 calories per day – say, a plain croissant or a chocolate bar – shows up as a weight difference of around 4 kilos after a year on average …an excessively rich diet is the major cause of overweight.

Junk food is mainly characterised by its extreme caloric density at a particularly low price. By spending €1.50, we can buy candies, crackers and sodas that provide 1000 calories on average, whereas to get that number of calories from fruits and vegetables, you need to spend €2.30. For meat, you’d need to spend €2.80, and even more if you wanted to eat fish. To these prices, you have to add time for food preparation – chopping it up, roasting it, and serving it – all taken from leisure time, the monetary value of which is far from nil.

Junk food, which provides calories cheaply and effortlessly, is purchased massively by the poorest populations – those most affected by excess weight – but also, for cultural reasons, it's largely purchased by the youngest, who are most at risk by the recent obesity epidemic. How can we get them to change their habits and eat lower-calorie foods, so as not to become obese? Our research has shown that for these products, the purchasing decision varies greatly as a function of prices, not so surprising for poor or young populations. For example, a tax of 5% would lead to a 15% reduction in sales – and a very important effect on obesity.

Unacceptable? Low-income families would see their buying power cut, which would certainly not prove popular at a time when boosting their buying power is a political leitmotif. But poor consumers could then find cheap calories in less-dense food items, like starchy foods which are less apt to be overeaten. These taxes would also favour the consumption of sugar-free sodas, or fat-free potato chips. In the long-run, the agribusiness industrials could also react very well to this sort of measure by changing their product composition to avoid this new taxation. It’s altogether possible to conceive of less fattening and less sugary snacks.

Finally, this sort of measure would be more effective than current nutritional information campaigns, which are rather costly, and aren’t – for now – evaluated for their impact. This measure would also be much more appropriate than the subsidy of fruits and vegetables which some demand. Our research has shown that the consumption of fruits and vegetables was, in effect, less impacted by a variation in price than the consumption of junk food. To have any significant effect, fruits and vegetables would need to be massively subsidised - hardly an option in these times of budget restriction. In short, to fight obesity, taxing junk food is the most cost-effective solution.

A version of this article was originally published in French in Le Monde, 25 September 2007


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