Food Prices and Consumer Demand: Differences across Income Levels and Ethnic Groups

Abstract

BackgroundTargeted food pricing policies may improve population diets. To assess their effects on inequalities, it is important to determine responsiveness to price changes across income levels and ethnic groups.ObjectiveOur goal was to estimate price elasticity (PE) values for major commonly consumed food groups in New Zealand, by income and ethnicity. PE values represent percentage change in demand associated with 1% change in price of that good (own-PE) or another good (cross-PE).DesignWe used food expenditure data from national household economic surveys in 2007/08 and 2009/10 and Food Price Index data from 2007 and 2010. Adopting an Almost Ideal Demand System approach, own-PE and cross-PE estimates were derived for 24 food categories, household income quintiles, and two ethnic groups (Māori and non-Māori).ResultsOwn-PE estimates (with two exceptions) ranged from −0.44 to −1.78. Cross-PE estimates were generally small; only 31% of absolute values were greater than 0.10. Excluding the outlier ‘energy drinks’, nine of 23 food groups had significantly stronger own-PEs for the lowest versus highest income quintiles (average regression-based difference across food groups −0.30 (95% CI −0.62 to 0.02)). Six own-PEs were significantly stronger among Māori; the average difference for Māori: non-Māori across food groups was −0.26 (95% CI −0.52 to 0.00).ConclusionsFood pricing policies have potential to improve population diets. The greater sensitivity of low-income households and Māori to price changes suggests the beneficial effects of such policies on health would be greatest for these groups.

Sociodemographic Differences in Fast Food Price Sensitivity

“…Economic theory suggests lower income individuals are more sensitive to price changes 9,10 . Recent findings support greater response to food prices among sociodemographic subpopulations at higher risk for diet-related health outcomes, such as racial minorities or low income 11,12 . However, most prior work on food price effects has been small experiments and cross-sectional studies, and has yielded inconsistent results 3,8,13,14 .…”

Interventions promoting healthy eating as a tool for reducing social inequalities in diet in low- and middle-income countries: a systematic review

“…One example in a HIC (New Zealand) is a targeted food pricing policy which was effective to improve the diet of the entire population and reduce dietary inequalities [56]. In LMICs, some examples of structural interventions to reduce social inequalities in diet and improving health and nutrition outcomes include “Bolsa Familia”, a social welfare program in Brazil, and “Oportunidades”, a conditional cash transfer program in Mexico.…”

Governance, regulation and health equity

“…According to modelling literature, regulatory approaches that combine taxes on unhealthy foods with subsidies on healthy foods such as fruits and vegetables are likely to have the greatest positive influence on inequities in healthy eating (Thow et al 2010;Ni Mhurchu et al 2013;Nicholls et al 2011). …”