Fat Taxes, or Thin Subsidies? Fruit and vegetable subsidy effectiveness on health outcomes

Abstract

In order to counter the rise in obesity a variety of public policy interventions have been suggested to realign food prices that encourage unhealthy consumption patterns. Recent discussions have focused on “Fat Taxes”, where taxes are applied to foods high in fat and sugar, in order to mitigate the negative health consequences associated with their overconsumption. However research has suggested that these policies would be regressive and ineffective. An alternate policy is the “Thin Subsidy”, where fruits and vegetables are subsidized to increase their consumption to both improve weight management efforts and utilize their protective benefits. Empirical simulations are used on the National Health and Nutritional Examination Surveys in two-year cohorts from 2003 to 2010 to observe distributional implications and provide evidence for their contemporary effectiveness. The analysis indicates that a flat subsidy on fruit and vegetables would yield a favorable reduction in negative health outcomes, with the largest improvements towards individuals of lower socioeconomic status. The results also suggest that the cost effectiveness of the policy has diminished over the time period. Potential improvements to subsidy application are discussed.