We recently wrote about how difficult it is to motivate people to lose weight even if they're given a financial incentive. A recent study generalizes that difficulty to incentivizing shoppers to purchase more nutritious foods than usual or at least less food with low nutritional value.
A team of researchers, led by Dr. John Cawley from Cornell University, investigated how price incentives for nutritious foods (as compared with less-nutritious foods) would change buying behavior. A major point of the study was to see what effect taxes on less-nutritious foods which have been suggested by several groups might have on consumers' purchasing behavior.
They ran a randomized, eight-month experiment involving 208 households; food choices were incentivized or '"punished" (in a "carrot or stick" sort of way) by a 10 percent relative price difference between nutritious and less-nutritious foods. The researchers also asked whether responsiveness to the price changes was affected by how the change is "framed" that is, as a tax on less nutritious choices or as a subsidy for nutritious foods, or both. Finally they wanted to learn if the answers to those questions differed by consumers' income and/or education levels.
Participants in the study did a majority of their household's shopping, had children under 18-years old living at home, and did at least 75 percent of their shopping at one supermarket chain in upstate New York. They all had scanner cards that enabled the researchers to track their purchases, and debit cards that were used to deliver incentives and subsidies. The participants were randomly assigned to one of these groups:
- Group 1: Control received a 10 percent discount on all foods that had been rated with respect to nutritional value (52 households).
- Group 2: Nutritious food was 10 percent cheaper than less nutritious food (156 total households, 50 of which maintained that status for the entire study).
- Group 3: Tax group they were told they received a 15 percent discount on all rated food items and were taxed 10 percent (a net 5 percent discount); (51 households).
- Group 4: Subsidy group they were told they received a 5 percent discount on all rated food items plus an additional 10 percent subsidy on nutritious foods (a total of 15 percent off nutritious foods); (55 households).
Each week, subjects received an email notifying them of the amount of incentive or subsidy they had received, and also reminded them which foods were taxed and which ones were subsidized. Ninety-one percent of the participants had more than a high school education, and about 94 percent were white.
When there was a 10 percent difference in price between nutritious and less nutritious foods, spending on the former rose by $1.11 per week, while that on the latter fell by $1.55 per week but these differences were not statistically significant. Further, they also found that there were no significant differences in spending between the tax and the subsidy groups that is, how the price differences were framed didn't affect spending to a significant extent.
Similarly, when the data were examined with respect to income, even though lower-income households increased spending on both nutritious and less-nutritious foods by over $7.00 per week, and the higher-income households spent $1.27 and $4.02 less on nutritious and less-nutritious foods, respectively, the differences with respect to income were not significant.
However, when the effect of education or income on framing effects were examined, significant differences were found. For example, low-income households in the Subsidy Group (#4) actually increased their purchases of less-nutritious foods and this increase was statistically significant. But although they also purchased more nutritious foods, that increase wasn't significant.
At the end of the study, participants were asked how they interpreted the treatments they had undergone (e.g., subsidy or tax). The authors stated "participants, no matter what their frame, tended to interpret the relative price change as a subsidy for nutritious food rather than a tax on less-nutritious food." Further, even though their actual shopping behavior did not support this conclusion, participants in the treatment groups all "expressed greater agreement with the statements that they were buying more starred (nutritious) foods, more healthier foods, and a higher percentage of healthier foods."
The authors concluded that if taxes were to be effective in changing behavior, they would have to be larger than the 10 percent price changes used in this study. Further, subsidies for nutritious foods might increase purchases of all foods by lower-income shoppers even the less-nutritious foods such taxes are designed to discourage.
The authors acknowledge that the results with these overwhelmingly white, well-educated and higher-income households are not necessarily generalizable to other populations. And finally, although they did track food purchases, they did not observe food consumption, which after all, is the key to whether or not food taxes or subsidies would affect health.