Session: Obesity & Food
Room: Hollister 306
Time: Tue 10:15-11:45

Presenter: Xin Xu (University of Illinois at Chicago. IHRP)

Discussant: Michael Grossman (City University of New York & NBER)

Abstract

In the United States, the 2007-2008 prevalence of obesity was 32.2% among adult men and 35.5% among adult women (Flegal, et al. 2010). The aggregate national medical costs that can be attributed to overweight and obesity were $113.9 billion (Tsai, et al. 2010). Although a number of researchers and policymakers have devoted significant resources to address the recent rapid rise in obesity in the United States, “the prevalence of overweight and obesity has increased sharply since the mid 1970s” (Centers for Disease Control, 2008) and most of this increase occurred in the 1980s and 1990s (Cutler, et al., 2003). An interesting phenomenon is that the reduction in food prices has occurred simultaneously with the obesity epidemic over the past 30 years (Finkelstein, et al., 2005). The main purpose of this paper is to examine the long-term effect of food prices on obesity, by exploring the co-occurrence between the growth in obesity and the reduction in food prices from 1976-2001 in the United States.
Unlike most of the existing literature, instead of considering absolute food prices, we emphasize on changes in relative prices by taking into account of prices for a market basket of other consumer goods and services, so as to better explain the price impact on the changes in individual consumption pattern. In addition, our empirical specification allows for heterogeneous effects of relative prices of food at home and food away from home on obesity. We also include a wide variety of controls for the changes in neighborhood contextual factors and changes in women’s time value from 1976 to 2001 to strengthen the casual interpretation of our results.
Empirically, we take the advantage of the nationally representative large panel data, the National Health Interview Survey (NHIS) from 1976 to 2001, which contains samples for the time period with the fastest growth of obesity rates. We find little evidence of the association between relative food prices and body mass index. But we find consistent negative relationship between relative prices of food at home and the increase in obesity. Our findings suggest that reductions in relative food prices can explain about 20 percent of the obesity growth from 1976 to 2001 and such effect is more pronounced for the low-educated and men. The results of the study provide a strong interpretation of the long-term growth of obesity rates in urban settings.

Key Terms

obesity, relative prices, food at home, food away from home

Authors:

Xin Xu (University of Illinois at Chicago. IHRP) , Jayachandran Variyam (United States Department of Agriculture. the Diet, Safety, and Health Economics Branch) , Zhenxiang Zhao (University of Illinois at Chicago. IHRP) and Frank Chaloupka (University of Illinois at Chicago. Economics and IHRP)