IEA Discussion Paper No.82 CHEAP AS CHIPS: Is a healthy diet affordable?

This report from the UK free market think tank Institute of Economic Affairs claims that healthy food is actually cheaper than ‘junk food’. In drawing this conclusion the IEA also states that taxes on unhealthy foods (consumed as they say disproportionately by people with low incomes) is unlikely to be enough to change consumer behaviour and will be regressive - it will hit poorer people the hardest. 

From the report summary:

  • It is widely believed that healthy eating is relatively expensive whereas ‘junk food’ is relatively cheap. This has led to an assumption that poor diets and obesity are directly caused by economic deprivation.
  • Some studies have compared the price-per-calorie of various types of food. The inherent bias of this method has the effect of making many high-calorie food products appear cheap. For example, a low calorie yoghurt appears to be more expensive than an otherwise identical high calorie yoghurt despite both products retailing at the same price.
  • This report compares the price of food under two separate methodologies: direct comparisons of healthy and less healthy substitutes, and comparisons of healthy and less healthy products by edible weight. Prices were taken from two leading British supermarkets in November 2016.
  •  There is little difference between the price of regular food products and their healthier substitutes in most categories, such as baked beans, soft drinks, milk and bread. A few healthier options are more expensive (eg. brown rice, lean mince) while others are cheaper (eg. low-sugar breakfast cereals, yoghurt). White meat is significantly cheaper than red meat, but processed meat tends to be cheaper than fillets of meat. Most healthy substitutes cost the same, or are within 10 per cent (+/-), of the less healthy option.
  • Measured by edible weight, healthier food in supermarkets tends to be cheaper than less healthy food. A wide range of fruit, vegetables and starchy carbohydrates are available at ≤ £2.00 per kilogram. By contrast, the majority of less healthy products, such as ready-meals, chocolate, crisps and bacon, cost ≥ £3.00, with very few available for less than £1 per kilogram.
  • With the exception of fish, all of the food groups recommended in the UK government’s Eatwell Guide can be bought for less than £2.00 per kilogram and a wide range of vegetables are available for less than £1.00 per kilogram. The recommendation of eating five portions of fruit and vegetables a day can be met for as little as 30p.
  • The ingredients for a nutritious meal can be bought for significantly less than the cost of ‘junk food’, ready-meals and – by a wide margin – takeaway food. It is not the direct cost of less healthy food choices that drives their consumption. On the contrary, it seems that UK consumers are prepared to pay more for taste and convenience. Neither price nor nutritional quality are necessarily considered paramount by food shoppers.
  • Since healthy food is generally cheaper than less healthy food, it is unlikely that taxes and/or subsidies would have a significant impact on dietary choices. Taxing food that is disproportionately consumed by people on low incomes in order to subsidise food that is disproportionately consumed by people on high incomes would be heavily regressive unless people on low incomes responded by changing their dietary habits dramatically, which is unlikely.

You can read the full report here.

A large number of organisations and reports have looked at issues of food taxes and the affordability of junk food versus healthy food - and have come to a completely different opinion.  See for example: the FCRN’s Policies and actions to shift eating patterns: What works?, the Food Foundation’s “FORCE-FED: Does the food system constrict healthy choices for typical British families?” , the report by by the Fabian Commission on Food and Poverty, as well as The Institute of Fiscal Studies' verdict on a sugary drink tax.

For more research, see this systematic review looking at the potential of food taxes to shift diets here and another paper looking at effects of food taxes on GHG intensive foods here.

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