Obesity accounts for medical costs and lost productivity totaling more than $100 billion per year. Two important economic factors have been forwarded to explain obesity trends. The first is that healthy, palatable foods are no longer affordable to lower-income consumers. Recent decades have seen a trend toward lower consumption of nutrient dense fruits and vegetables and increasing consumption of less expensive energy-dense foods such as added sugars, fats, and refined grains among lower socioeconomic status households. The second is that lower socioeconomic status is associated with less investment in future well-being through healthy behaviors such as good nutrition and regular exercise. Both the availability of inexpensive, convenient, high-calorie foods and the lack of a desire to eat a healthy diet may explain obesity trends. However, they imply different means of reversing these trends.
Taxes and subsidies are economic policy instruments that can induce healthier diets. Advances in food production have reduced the calorie costs of sweeteners and fats well below the costs of fruits, vegetables and proteins. Aligning diets with USDA recommendations would require significant market intervention. In order to improve diet quality, policymakers need to focus on the aggregate supply of healthy and unhealthy foods. Investing in better nutrition information only shifts the supply of healthier foods toward higher-income, health conscious consumers. The most promising food consumption policy interventions focus on providing incentives to increase production of healthier foods, and modifying choice architecture to improve diet quality among myopic consumers who are less likely to select a healthy diet.