A popular policy option for addressing the growth in weight has been the imposition of a “fat tax” on selected foods that are deemed to promote obesity. Understanding the public economics of “fat taxes” requires an understanding of how or even whether individuals respond to changes in food prices over the long-term.
This study tested the short- and long-run body weight consequences of changing food prices, in the Health and Retirement Study (HRS). The authors found very modest short-term effects of price per calorie on body weight and the magnitudes align with the previous literature. The long-term effect is much bigger, but it takes a long time for the effect to reach the full scale. Within 30 years, a 10 percent permanent reduction in price per calorie would lead to a BMI increase of 1.5 units (or 3.6%). The long term effect is an increase of 1.9 units of BMI (or 4.2%).
From a policy perspective, these results suggest that policies raising the price of calories will have little effect on weight in the short term, but might curb the rate of weight growth and achieve weight reduction over a very long period of time.