Academy Health Bittersweet: How Prices of Sugar-Rich Foods Contribute to the Diet-Related Disease Epidemic in Mexico Tadeja Graˇ cner RAND Corporation June 27, 2016 1 / 25
Introduction Motivation Global Public Health Crisis Obesity: >1 billion overweight adults > 300 million of them clinically obese Diabetes: > 10 % of people diabetic A leading cause of death in Mexico Hypertension: > 30 % of people hypertensive A leading cause of premature death 2 / 25
Introduction Motivation Global Public Health Crisis Obesity: >1 billion overweight adults > 60 % in LMIC > 300 million of them clinically obese Diabetes: > 10 % of people diabetic > 80 % in LMIC A leading cause of death in Mexico Hypertension: > 30 % of people hypertensive > 80 % of CVD deaths in LMIC A leading cause of premature death LMIC: low- and middle-income countries CVD: cardio-vascular disease 2 / 25
Introduction Motivation Global Public Health Crisis Relative decline of prices of unhealthy processed foods Shift towards unhealthy diet (Cutler et al., 2003; Drewnowski and Popkin, 1997; Lakdawalla and Philipson, 2009) Increased total calorie intake Change in diet’s nutritional composition Increased carbohydrates, sugar, fat intake Decreased fiber intake 3 / 25
Introduction Motivation Global Public Health Crisis Relative decline of prices of unhealthy processed foods Shift towards unhealthy diet (Cutler et al., 2003; Drewnowski and Popkin, 1997; Lakdawalla and Philipson, 2009) Increased total calorie intake Change in diet’s nutritional composition Increased carbohydrates, sugar, fat intake Decreased fiber intake ⇒ Proposed price-based policies (e.g. sugar/fat tax) 3 / 25
Introduction Motivation Global Public Health Crisis Relative decline of prices of unhealthy processed foods Shift towards unhealthy diet (Cutler et al., 2003; Drewnowski and Popkin, 1997; Lakdawalla and Philipson, 2009) Increased total calorie intake Change in diet’s nutritional composition Increased carbohydrates, sugar, fat intake Decreased fiber intake ⇒ Proposed price-based policies (e.g. sugar/fat tax) But...how sensitive is health to price changes of foods rich in these nutrients? 3 / 25
Introduction Research Question Research Question W hat is the effect of changes in prices of foods rich in sugar, fat or combination of other nutrients on the prevalence of Obesity (BMI, abdominal obesity) Type 2 Diabetes Hypertension 4 / 25
Introduction Research Question Research Question W hat is the effect of changes in prices of foods rich in sugar, fat or combination of other nutrients on the prevalence of Obesity (BMI, abdominal obesity) Type 2 Diabetes Hypertension 1 Price changes of foods rich in which nutrients matter? 2 How long does the effect persist? 3 Is there heterogeneity in health response to prices - why? 4 / 25
Introduction Research Question Research Question W hat is the effect of changes in prices of foods rich in sugar, fat or combination of other nutrients on the prevalence of Obesity (BMI, abdominal obesity) Type 2 Diabetes Hypertension 1 Price changes of foods rich in which nutrients matter? 2 How long does the effect persist? 3 Is there heterogeneity in health response to prices - why? → Context: Mexico 1996-2010 4 / 25
Introduction Related Literature Related Literature Consumption Prices Health Harding et al. 2014 Dubois et al., 2013 Becker et al., 1991 O’Donoghue and Rabin, 2003 Fletcher et al., 2010 Finkelstein et al. 2010 5 / 25
Introduction Related Literature Related Literature Consumption Prices Health Sugar Harding et al. 2014 Basu et al., 2013 Dubois et al., 2013 Lustig, 2013 Becker et al., 1991 Taubes, 2007 O’Donoghue and Rabin, 2003 Fat Barry and Popkin, 1998 Fletcher et al., 2010 Finkelstein et al. 2010 5 / 25
Introduction Related Literature Related Literature Powell et al., 2009; Grossman et al., 2014; Auld et al., 2009, Lu&Goldman, 2010; Datar&Sturm, 2005; Dasgupta, 1997; Popkin, 2000; Fernald et al., 2008 1 Grouping of foods into healthy vs unhealthy 2 Evidence on body mass index 3 Cross-sections, short individual panels, selected samples 4 Mostly US This paper Consumption Prices Health Sugar Harding et al. 2014 Basu et al., 2013 Dubois et al., 2013 Lustig, 2013 Becker et al., 1991 Taubes, 2007 O’Donoghue and Rabin, 2003 Fat Barry and Popkin, 1998 Fletcher et al., 2010 Finkelstein et al. 2010 5 / 25
Context Mexico: Variation in Prices Variation in food prices - food imports Large reduction and variation in relative prices of processed foods since 1994 Increased import quotas and imports of processed foods (Clark et al., 2013) 6 / 25
Context Mexico: Variation in Prices Variation in food prices - retail entry Large reduction and variation in relative prices of processed foods since 1994 Increased import quotas and imports of processed foods (Clark et al., 2013) FDI removal → foreign retail expansion – lower prices (Hawkes, 2006; Atkin et al., 2014) 7 / 25
Context Mexico: Variation in Prices Variation in food prices - retail entry 1993 2001 2007 Source: Iacovone, 2009. 8 / 25
Context Mexico: Variation in Prices Variation in food prices - reduced tariffs Large reduction and variation in relative prices of processed foods since 1994 Increased import quotas and imports of processed foods (Clark et al., 2013) FDI removal → foreign retail expansion – lower prices (Hawkes, 2006; Atkin et al., 2014) Reduced tariffs – pass-through a function of distance to US border (Nicita, 2004) 9 / 25
Context Mexico: Data Data 1 Time series of prices with nutritional information on >25,000 products → Prices of nutritionally similar foods (1996-2010) Example: prices of sugar-rich, protein-rich, sugar-fat rich foods 10 / 25
Context Mexico: Data Data 1 Time series of prices with nutritional information on >25,000 products → Prices of nutritionally similar foods (1996-2010) Example: prices of sugar-rich, protein-rich, sugar-fat rich foods Nutrient Clusters 10 / 25
Context Mexico: Data Data 1 Time series of prices with nutritional information on >25,000 products → Prices of nutritionally similar foods (1996-2010) Example: prices of sugar-rich, protein-rich, sugar-fat rich foods 2 State-level administrative panel dataset on chronic disease incidence → Type 2 diabetes, hypertension (1996-2010, 32 states) 3 Nationally representative individual-level panel dataset → Obesity (BMI, waist circumference), diabetes, hypertension (2002-2009, >30,000 individuals) 11 / 25
Context Mexico: Data Data 1 Time series of prices with nutritional information on >25,000 products → Prices of nutritionally similar foods (1996-2010) Example: prices of sugar-rich, protein-rich, sugar-fat rich foods 2 State-level administrative panel dataset on chronic disease incidence → Type 2 diabetes, hypertension (1996-2010, 32 states) 3 Nationally representative individual-level panel dataset → Obesity (BMI, waist circumference), diabetes, hypertension (2002-2009, >30,000 individuals) 11 / 25
Approach Price Variation Approach ⇒ Regional price variation over time, conditional on location and year fixed effects 5.2 5 Ln(Price of Sugar) 4.8 4.6 4.4 1995 2000 2005 2010 Year Prices of sugary foods by states over time 12 / 25
Findings Sugary Foods Prices and Health Findings A decrease in the price of sugar -rich foods significantly increases : Obesity, type 2 diabetes and hypertension prevalence: 450 700 650 400 Hypertension Diabetes II 600 350 550 500 300 4.2 4.4 4.6 4.8 5 4.2 4.4 4.6 4.8 5 Log(Price sugar,t-1 ) Log(Price sugar,t-1 ) Diabetes II and Price of Sugary Foods Hypertension and Price of Sugary Foods 13 / 25
Findings Food Prices and Health Findings: Main Effects DV: Diabetes II Hypertension Log(waist) Abd.Obese Log ( P sugar ) t -0.055 -0.029 -0.038 -0.148 (0.015)*** (0.036) (0.021)* (0.053)*** Log ( P fats ) t 0.008 0.015 -0.033 -0.040 (0.016) (0.038) (0.021) (0.051) Log ( P fiber ) t -0.027 -0.056 -0.031 -0.087 (0.017) (0.055) (0.035) (0.095) N 11485 11758 21753 21753 Adj. R 2 0.05 0.04 0.29 0.12 Y Mean 0.11 0.18 90.13 0.66 N Clusters 29 29 32 32 Individual and year FE, and controls included. Robust standard errors in parentheses, clustered at the city level. */**/*** denotes significant at the 10% / 5% / 1% levels. 14 / 25
Findings Fatty Foods Prices and Health Findings: Main Effects Prices of foods rich in other nutrients, such as fat, do not seem to matter. 450 400 Diabetes II 350 300 250 4.2 4.4 4.6 4.8 Log(Price fat,t-1 ) Diabetes II and Price of fatty foods 15 / 25
Findings Heterogenous effect Findings: Heterogenous effects 1 Small response in consumption, but already pre-diabetic or pre-hypertensive 2 Substantial response in consumption 3 Both 16 / 25
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