Recent increases in obesity rates in the U.S. can be attributed in part to increases in energy intake, which are due to increases in purchases of high-calorie foods. These purchases are directly affected by the prices of these foods.

When compared to healthier foods, the prices of high-calorie foods with high sugar and fat content have increased at a much slower rate in the last 30 years. For example, since 1983, the price of fats and oils have increased by only 70%; sugars and sweets by only 66% and carbonated beverages by only 32%. Compare that to dramatic price increases in healthy foods: prices for fresh fruits and vegetables have increased by 190%; fish by 100%; and dairy products by 82%!

Economics 101 will tell you that if the price of a certain food increases, consumption of that food will decrease, and vice versa.

To assess how food prices influence choices, researchers at the University of Buffalo conducted an experiment in which they manipulated food prices and then observed what foods shoppers chose. Moms were recruited to participate in the study and were each given the same amount of money.

In the first shopping trip, the food prices were similar to local grocery chain prices. However, in subsequent trips, prices were changed. First, the prices of healthy foods such as fruits and vegetables were reduced by 12.5% and then by 25%. Predictably, when these prices fell down, the moms purchased more healthy foods. However, the surprising finding was what they did with the extra money. When the healthy foods cost less, the shoppers had more money leftover, and they ended up using it to buy more unhealthy foods! So, overall, even after prices for healthy foods dropped, the shopping baskets still contained the same amounts of fats and carbohydrates.

So instead of reducing the prices of healthy foods, researchers tried to increase the prices of unhealthy ones. The result? The shoppers bought less junk food overall and the nutritional values of their baskets improved. More specifically, a 10% increase in the price of unhealthy foods reduced total calories purchased by 6.5%, with a 12.8% reduction in fat and 6.2% reduction in carbohydrate calories.

The authors suggest “that a subsidy on healthy foods is unlikely to positively influence rates of obesity” and that “the results provide stronger support for taxes than for subsidies as a means of reducing consumption of less healthy foods and increasing consumption of healthier alternatives.”

They conclude:

“Taxing foods had the dual benefit of reducing purchases of HCFN (high-calorie-for-nutrient) foods while increasing purchases of LCFN (low-calorie-for-nutrient) foods with lower energy density. From a public-policy standpoint, this strategy had the additional benefit of generating significant tax revenue. If policymakers aim to reduce consumption of HCFN foods to control rising rates of obesity, then taxing these foods may be more effective than subsidizing LCFN foods.”