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Josh Wright reproduced a chart used recently in a piece by David Leonardt. Here is the chart:

The article (and chart) is lamenting the fact that healthful foods prices (relative) have been increasing faster than for “unhealthy” calorie dense foods.

Folks might be tempted to look at this chart to demonstrate that the relatively high cost of healthful foods explains the prevalence of obesity (e.g. we cannot afford to eat healthy). The empirical research suggests that even if this claim were true, it would only be able to explain 1% of the increase in BMI in the recent decades!

research by Gelbach, Klick and Strattman (which inspired the title of this post), which concludes that “relative price changes can only explain about 1 percent of the growth in BMI and the incidence of being overweight or obese over this period” and that  ” a 100 percent tax on unhealthful foods could reduce average BMI by about 1 percent, and the same tax could reduce the incidence of being overweight and the incidence of obesity by 2 percent and 1 percent respectively.

But let’s revisit the claim again. What can we learn by only knowing that the relative price of healthy foods has increased over time? All the chart tells us is that as compared to other food items, fresh fruits and vegetables have been getting more expensive. Does the conventional wisdom that the high price of healthy foods prevents us from being healthy follow? Can you draw the opposite conclusion? What mistake is the conventional wisdom making?

We don’t know why the relative prices of these objects changed! Now, I grant that it is probably likely that the conventional wisdom has merit, but reflect on the basics of supply and demand for a moment. What can cause prices to rise? It can be diminished supply vis-à-vis the supply of other goods. This is the story that fits in with the interpretation above. The argument being that unhealthy foods have become so cheap to produce that they are much more abundant relative to healthy foods (it could also be that healthy foods have actually become more expensive in absolute terms, perhaps due to land use restrictions, dedicating large swaths of land to growing feedstock for ethanol instead of foods, restrictions on international labor migration and trade, etc.).

Prices can also increase because relative demand increases! In other words, there is no way to tell a priori whether the increase in fresh food prices reflects a change in preferences toward that good, and away from the less healthy foods. And if this is the case, then the above chart, rather than being evidence for multinational food companies forcing us to be fat by sending us cheap unhealthy food, would actually provide evidence that we are all making a strong effort to eat more healthy. If I asked everyone why the cost of a New York Jets ticket is higher today than in the past, or higher today than the cost of a Rutgers football game played in the very same stadium under the very same conditions, I am sure people would offer up the fact that more people want to see the Jets game. So would the high price of Jets tickets be evidence of fewer people being able to consume Jets tickets? On the contrary, it would reflect that more people are already doing it, and that at the margin, it is harder for the next person to consume a Jets ticket today than for a Rutgers ticket.

It requires a little more than a raw price chart to make claims like that. Think of other analogous situations. The relative price of not going to college has fallen vis-à-vis of going to college. The chart would look identical to the one above. But in that case, would you be proudly pronouncing that some nefarious force is making us dumber (probably the Tea Party, I know)? Would you argue that this is the single most important part of the “stupidity” epidemic (link to dumb thing here)!!!

The above discussion is also leaving out the important fact that we are a lot richer today than we were in 1980. Now I know that some folks believe that real income for the middle class has been stagnant over this time period. But the chart above shows that the cost of fresh fruits and vegetables has increased by 30% over the last 30 years. My internet connection is out for the moment, so I cannot get the actual data, but the overall price level in the economy has increased by much more than this. In other words, even for an average family, the real burden of consuming fresh fruits and vegetables has been falling and not increasing.

The only thing that is unhealthy about the trend measured in that chart is the outpouring of nonsense regarding what it means.

5 Responses to “It Does Not Necessarily Mean What You Think it Means”

  1. Trapper_John says:

    I wonder how much of the price change is accounted for by the increasing share of organic products that command premium pricing.

  2. blink says:

    If I understand correctly (from Leonhardt), the chart shows the percent change in $/calorie. It distresses me that some can find a negative story in this graph. Relative to general inflation of about 100% over the same 30 year period, this shows that calories are *cheaper* today than they were 30 years ago even if you eat like a rabbit. We should be celebrating!

    Also, because of the aggregation, it is difficult to account for innovation/quality changes. I think Coke and McDonald’s hamburgers are pretty much the same as 30 years ago while “fruit and vegetables” may now include more specialty products (organic this, fair-trade that, free-range whatever…).

  3. Rod says:

    So-called “organic foods” are not necessarily any more healthful than foods grown with chemical fertilizers, and herbicides like Roundup do not wind up in the soybeans that grow more abundantly than in fields where weeds get to compete with the crops. The use of pesticides are another thing, particularly if they are improperly applied. For example, when one sprays for bugs on an alfalfa field, it’s done AFTER the hay is harvested. If one sprays pesticides on an alfalfa plant just before the hay is cut, the cattle eating it would probably metabolize it into their milk. That would be nuts.

    I once toured an organic farm near Phoenixville, PA, and saw fields full of weeds (somebody must have taken the day off when it was time to cultivate the corn fields) and a plainly dirty milking barn filled with dirty cattle. I would not want to drink raw milk from that farm.

    If you’re a vegan, all this discussion about cattle is moot. I still hold that it makes no difference at all whether you use a little bit of chemical fertilizer on your vegetables. The best thing for garden crops is cow manure, which you can’t have if you are morally opposed to the imprisonment of cows.

  4. Rod says:

    So why are the prices so high at Whole Foods? And why do otherwise smart and successful people pay more at Whole Foods than at, say, the Shop Rite?

    1. The parking lot is filled with Volvos and Saabs. You have a Lexus, so it will be easy to find your car.

    2. You won’t have to rub elbows with wascally wepublicans at Whole Foods.

    3. There are plenty of sickly-looking people with pasty white complexions going into Whole Foods to buy their organic vitamins. “I need to get more vitamins,” you think to yourself. You look in the mirror in your Lexus. You look a little pasty, too.

    4. Your neighbors might see you go into Whole Foods and think you are too cool to vote Republican (corollary of #2).

    5. Where else can you find a quart of guava juice?

    6. Whole Foods is in Westport. The ShopRite is in Bridgeport.

  5. Trapper_John says:

    No arguments here–I was merely stating that these products are priced higher, and as they have gained share, may account for some of the change. I personally believe “organic” is code for “produced using obsolete methods”.

    Another interesting thing about the graph is the use of $/calorie as a metric. A large head of lettuce has ~100 calories in it. You’d have to eat 20 to get 2000 calories. Small shifts in the price per unit (a head) result in large shifts in $/calorie. The idea behind a diet rich in fruits and vegetables is that is LOWER in calories (can you imagine eating 20 heads of lettuce in a day?) but fills you up.

    Also note that breakfast cereal drops starting about 1995–wasn’t that when Atkins diets first became popular? Supply & demand.

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