The Effects of Farm Commodity and Retail Food Policies on Obesity and Economic Welfare in the United States
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Many commentators have claimed that farm subsidies have contributed significantly to
the ―obesity epidemic‖ by making fattening foods relatively cheap and abundant and,
symmetrically, that taxing ―unhealthy‖ commodities or subsidizing ―healthy‖
commodities would contribute to reducing obesity rates. In this paper we use an
equilibrium displacement model to estimate and compare the economic welfare effects
from a range of hypothetical farm commodity and retail food policies as alternative
mechanisms for encouraging consumption of healthy food or discouraging consumption
of unhealthy food, or both. We find that, compared with retail taxes on fat, sugar, or all
food, or subsidies on fruit and vegetables at the farm or retail, a tax on calories would be
the most efficient as obesity policy. A tax on calories would have the lowest deadweight
loss per pound of fat reduction in average adult weight, and would yield a net social gain
once the impact on public health care expenditures is considered, whereas the other
policies typically would involve significant net social costs.