calorie foods.
These results have a direct consequence on policy-makers’ actions. As advocated
by some, taxing unhealthy foods to arrest the dynamics of the prevalence of obesity
may not only be of limited impact due to low price responses but may also increase
the inequality of groups with lower economic or social status. Chouinard et al.
(2007) show that a ‘’fat tax” instrument may be extremely regressive at lower income
levels. Thus, the cost of a percentage increase in price by buying an extra unit of
unhealthy food is borne to a greater extent by lower income groups (and lower
educated groups).
Conversely, subsidies for healthy foods are likely to be more successful, especially
for the disadvantaged subpopulation (Lin and Guthrie 2007)15. That is, because
more indigent groups react more to changes in relative food prices, by targeting
subsidies for each Euro spent on healthy foods, participants may not only have
monetary benefits but also, as an externality, make an improvement by reducing the
prevalence of overweight.
In addition, estimations suggest that consumption income responses for individu-
als below the relative poverty line is higher for healthy foods by 10 basis points than
otherwise assessed so far for representative individuals. Instead, we can project a
demand response for unhealthy foods, other foods and non-durable goods which is 4
and 5 basis points lower, respectively, than previously estimated in the full sample
model.
These results are crucial when we attempt to address complementary health and
fiscal policies. let us consider the introduction, with the Budget Act for 2009, ap-
proved at the end of 2008 by the Italian Parliament, of the ‘’social card” for indigent
people aged over 65 and poor families with children under the age of three. Although
the benefits for health are constrained by the limited numbers of potential beneficia-
ries and the dimension of the subsidy of the program which, in intent, follows that
of the US food stamps, this welfare program could be used as a strategy to trigger
policies to prevent the rise in the prevalence of overweight and obesity. This social
program, which provides 40 euro a month and potentially involves less than the 20
percent of indigent people, may be extended, with very small administrative costs,
to individuals below the poverty line, by targeting subsidies for purchasing healthy
15 An implicit reason exists for the ineffectiveness of unhealthy taxation of energy-dense foods, determined by
market competition in developed countries. As discussed by Powell and Chaloupka (2009), the presence of large
quasi-competitive non-taxed high-calorie foods sold by groceries can potentially substitute taxed foods, making the
impact on individual or aggregate body weight limited or irrelevant.
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