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2009-2010 Essay Contest Standard Economics First Place Essay

Subsidizing the Way to Slim

Oliver Carrillo
Little Falls Community High School
Little Falls, Minnesota

A stroll down the most innocent-looking grocery store in the most innocent of places can be a frightening thing. While safe from pitfalls and poison darts, on the shelves lurk traps that are possibly more dangerous. One dollar: an apparently innocent bag of chips. Two dollars: a box of innocuous snack cakes. Though they won’t maim, they are far from safe; every time one is consumed, obesity becomes a larger problem to the nation. Today, the Center for Disease Control estimates nearly 73% of the United States’ population to be overweight, obese, or extremely obese. The explicit costs due to the ailing of the obese numbered above seventy-five billion dollars a decade ago and rise with every passing day. While it is clear that the problem must be addressed, the method is not as obvious. Though Pigouvian taxes are often proposed, they would not address obesity at its root; subsidies to healthy food markets, however, would.

Obesity demonstrates a strong correlation to economic status. According to the American Journal of Clinical Nutrition, this most likely is due to a simple concept: energy density, the amount of energy gained by consumption per unit of a food. Because refined grains and added sugars are typically very high in energy density and low in price, they are consumed in greater quantities by those whose incomes are lower. Healthier, nutritious foods proven to decrease risk of obesity (vegetables, fruit, et cetera) are notably more expensive than the alternatives and are perceived to be less enjoyable. These healthy foods are typically far lower in energy density than their unhealthy alternatives. With lower income, a greater amount of energy can be gained by consuming junk food instead of fruits and vegetables.

Even though foods higher in sugars and carbohydrates are thought of as tasting better, those who can regularly afford healthier foods are observed to consume them regardless of taste. It stands to reason that if the price of healthy foods were lowered, lower-income households could afford to purchase them. The cost of supplying these healthier foods is, unfortunately, higher than their unhealthy competitors because their demand is lower and because they are typically more arduous to produce. Were the production of these goods subsidized by the government, some of the burden to the producer would be lifted andproduction costs mitigated. Prices would drop and the supply would rise, producing more appealing alternatives to unhealthy food.

The alternative to subsidizing these markets is to do the opposite: tax the production of unhealthy foods. The problem with the method of this Pigouvian taxation is more complicated. These foods are statistically more consumed by the lower class due to budget restraints; a tax on these foods will damage the impoverished more than anyone else. Given limited resources, it’s easier for a family to survive on potato chips and pizza rather than broccoli and chicken breasts. Because the demand for junk food is comparatively inelastic, a tax on unhealthy food will increase production costs, passing them mostly to the consumers and very likely not decreasing consumption by a meaningful amount. Taxing unhealthy foods is a poor idea; it is far too regressive and likely ineffective. While it may decrease consumption slightly, it does not solve the underlying problem of the obesity epidemic: healthy food choices are not appealing enough that people consume them at the social optimum, a problem which subsidization would combat directly.

In addition to making healthy foods more available to those of lower income, subsidization would accomplish a more general goal without damaging the lower class: increasing demand for healthy foods in the entire market. Obesity is not endemic to the impoverished; while they are more likely to suffer from it, they are not the only group affected. A subsidization of healthy food appeals to the most basic laws of economics: the laws of supply and demand. If the price of healthy food is lowered, everyone—not just the impoverished—will be more likely to consume it. At lower prices, anything is more appealing than it is at a higher price, and this will be reflected in aggregate consumption.

Accompanying a change in prices, a shift in thought must occur for progress truly to be made in reducing obesity. Though subsidies to the markets in question will make healthy food more available to consumers, it does not mean that they will purchase them. Education is the only tool capable of fixing that problem. Though attempts have already been made to accomplish increased levels of education regarding food choices, a greater emphasis must be placed on younger children. By the time that students approach their middle-school years, they have most often already adopted the eating habits they will keep for the rest of their lives. Mandated health classes attempting to counter this often occur after their ideas regarding health have already solidified.

There is certainly no denying that obesity is a problem harming the economy of the United States. Every year, patients with diabetes, heart attacks, and a host of other medical illnesses visit hospitals due to their weight, and every year this pulls the country further from its potential level of production. The populations of the United States and other countries around the world have proven that incorrect levels of food consumption are problems that a market will not correct on its own. Obesity grows globally, and it will require a firm government hand to rectify. It cannot be done in a way damaging to the country itself, but instead must simply honor a tactic older than the study of economics: provide better options and better information and people will find their own way.

Works Cited

CDC: Overweight and Obesity N.p., 7 Dec. 2009. Web. 4 Jan. 2010.

Drewnowski, Adam, and Nicole Darmon. “Food Choices and Diet Costs: an Economic Analysis.The Journal of Nutrition. N.p., Apr. 2005. Web. 26 Mar. 2010.

The Economics of Obesity N.p., July 2005. Web. 4 Jan. 2010.

U.S. Census Bureau N.p., 4 Jan. 2010. Web. 4 Jan. 2010.