IEA releases new report on the real cost of food
When measured by edible weight, the cheapest ready-meals, pizzas, burgers and sugary breakfast cereals cost more than £2 per kilogram, whereas typical fruit and vegetables cost less than £2 per kilogram. And whilst £1 will buy you one cheeseburger, that same £1 could buy you a kilo of sweet potatoes, two kilos of carrots, two and a half kilos of pasta, ten apples or seven bananas. And the Government’s daily recommended five portions of fruit and vegetables can cost as little as 30p.
The report debunks studies which claim that healthy food is more expensive, finding they use the flawed methodology of comparing food products by their cost-per-calorie. This has the perverse effect of making low-calorie food appear expensive by definition. A better approach is to compare typical servings of food by weight or portion size.
Ultimately price is not the main driver of unhealthy food consumption; often consumers are prepared to pay more for taste and convenience. The popular belief that obesity and poor nutrition are directly driven by economic deprivation is untenable. If the price of food was a primary consideration, people (particularly those on low incomes) would eat more fruit and vegetables. The use of taxes and subsidies to incentivise better nutrition is unlikely to be successful. In practice, these measures would tax the poor and subsidise the rich.
Assumption that the high cost of healthy food causes obesity is flawed:
- Obesity has increased rapidly at a time when incomes have risen and food prices have fallen.
- Obesity rates are higher in rich countries than in poor countries.
- People fail to buy more fruit and vegetables when they become richer.
- There is a high rate of obesity among people on middle and high incomes.
- The correlation between deprivation and obesity is only seen among women.
- Obesity rates among men are highest among middle income earners.
Proposed tax and/or subsidies would be regressive:
There have been calls to bring in taxes or subsidies to encourage people to make healthier food choices, but such measures would be hugely problematic:
- Taxing food would be highly regressive given that food disproportionately consumed by people on low incomes would be taxed in order to subsidise food that is disproportionately consumed by high earners.
- It is doubtful that changes in pricing would have a significant impact on people’s choices given that healthy food is already cheap.
- Subsidising foods would create huge administrative costs given the difficulty classifying each foodstuff would present.
Commenting on the report, author Christopher Snowdon, Head of Lifestyle Economics at the Institute of Economic Affairs said:
“A diet of muesli, rice, white meat, fruit and vegetables is much cheaper than a diet of Coco Pops, ready-meals, red meat, sugary drinks and fast food. A wide range of healthy alternatives are available at the same price as the less healthy options.
“The idea that poor nutrition is caused by the high cost of healthy food is simply wrong. People are prepared to pay a premium for taste and convenience.
“A nutritious diet that meets government recommendations is more affordable than ever. Given the relatively high cost of ‘junk food’, it is unlikely that taxing unhealthy food or subsidising healthy food would change people’s eating habits. Instead, it would transfer wealth from the poor to the rich.”
Notes to editors:
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To download the briefing, Cheap as Chips: Is a healthy diet affordable? please click here.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
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