An experiment reported in the latest issue of Psychological Science suggests that taxes are more effective than subsidies at encouraging people to buy healthier foods. The researchers gave a group of mothers a set amount of play money to purchase pretend food in a simulated grocery store. There were five different shopping conditions: one with regular prices, two where the prices of food with low "calorie-for-nutrition" scores were reduced (by 12.5 percent and then by 25 percent), and two where the prices of food with high calorie-for-nutrition scores were raised by the same percentages. The results:
Taxing unhealthy foods reduced overall calories purchased, while cutting the proportion of fat and carbohydrates and upping the proportion of protein in a typical week's groceries.
By contrast, subsidizing the prices of healthy food actually increased overall calories purchased without changing the nutritional value at all. It appears that mothers took the money they saved on subsidized fruits and vegetables and treated the family to less healthy alternatives, such as chips and soda pop. Taxes had basically the opposite effect, shifting spending from less healthy to healthier choices.
The failure of the subsidies (an idea championed by anti-fat crusaders such as Kelly Brownell) is not surprising, since people do not buy Doritos and ice cream because they are cheaper than broccoli and brown rice. As for the success of the taxes, the enthusiasm of health nannies should be tempered by the fact that the experiment was highly artificial, since the subjects were not spending real money on real food. The results of a study where product choice and total spending were artificially limited do not necessarily predict what would happen in the real world, where people may switch to cheaper brands or shift money from other expenditures to groceries when the prices of their favorite foods go up rather than heading to the produce aisle. To the extent that "junk food" taxes do affect grocery purchases, they will be most effective for people of modest means, a fact that should give pause to self-identified progressives who favor this sort of "public health" intervention. I'm not sure why such do-gooders think a highly regressive tax is redeemed by the fact that it is also highly paternalistic, driven by rich white people's notions of what is good for poor brown people.