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Well, does it? This is an interesting, and short, podcast from Freakonomics about the odd effects that this recession has had on our waistlines. Some things to consider while listening: What do you think the cross-price elasticity coefficient is like between food and cigarettes? What do you think the income elasticity coefficient is like for cheap food and cigarettes? Which effect do you think matters most in determining how much cheap food we consume - the "income effect" (recession implies lower income) or the "substitution effect" (price of substitutes i.e. cigarettes increasing)?
R10412296
2/29/2012 06:47:11 am
Food and cigarettes are complements and the cross price elasticity coefficient would prove this. For food, the income elasticity would show that as a person's income goes down, they spend more money on cheap, unhealthy food (because unhealthy food is an inferior good). For cigarettes, it would not be the same, though. Cigarettes are an addictive substance, so it does not matter if a person's income goes down or the price of cigarettes rises, the demand for cigarettes is going to stay constant for that person. Although cheap, unhealthy food is typically an inferior good, I think that the income effect has a lot less to do with the amount of unhealthy food that Americans buy. It has a lot more to do with the substitution effect because if food prices go up, a person might spend more money on cigarettes to get rid of the hunger.
R10379616
3/5/2012 06:27:28 am
I don't necessarily agree that food and cigarettes are compliments because for that to be true if the price of food increased that would lead to a decrease is the demand for cigarettes which is not the case. Especially since cigarettes are known to decrease your appetite you would be eating less and essentially buying less food. I do agree that cigarettes are fairly in inelastic due to the fact that they are addicting and a price increase is many times not going to affect an addicts decision as to whether or not to purchase.
R10410812
3/5/2012 11:16:30 am
I disagree. I think people smoke cigarettes more because they are addicted to them, not necesarrily to deal with the hunger. That may be a side effect of smoking them, but i dont think thats why they smoke them. Cigarettes seem to be an inelastic good. while healthy food is an elastic good. When the peoples wages go down, people tend to buy the cheaper food, which usually is the unhealthy food, but to me, i believe that a persons wage would have to drastically change for them to change their eating habits because people tend to eat what they want to eat, and if somebody eats healthy, they will typically keep trying to eat healthy until they absolutely cannot afford it anymore.
R10316954
3/1/2012 11:04:58 am
I believe cheap food has to do with the income effect, lower income means going back to inferior goods, cheap fattening foods. With healthier food costing more it makes sense in a recession that more fattening food would be purchased. The idea of a fat tax was an interesting idea but with it being a tax that would probably hurt lower incomes families more, which isn't usually something you want in a tax.
R00062662
3/6/2012 02:35:14 pm
True, but most low income families are on food stamps, and most likely, if there was a tax on these foods the lower income families would get more in the way of food stamps.
R10436673
3/3/2012 05:14:44 am
I don't necessarily think that our recession is making people I eat fast food, but I think it effects the way the people think about food. When in a recession and in the lower class you have 2 choices to make. The 2 choices are eating fat foods like mcdonalds or to manage your calories by eating nutritious fruit bars, or just fruits and vegetables. The recession is not a reason for people to eat fat foods but I just don't think that people know how to react a different way. Also, in a recession and trying to save money I don't understand how you would chose cigarettes over food. It's not a substitution effect because you cant eat cigarettes to gain nutritional value.
R10359949
3/5/2012 08:01:12 am
You are right about people having two choices for food when you are in a recession and in the lower class. However, fast food restaurants like the one you mentioned offer high calorie meals for low prices so it's not always feasible for someone to choose the healthier option of fresh fruits and vegetables which are low in calories and higher in price. Regarding the choosing of cigarettes over food, people who smoke suffer from an addiction. This addiction overrides what non-smokers may seem as clear priorities most times, and causes those suffering from the addiction to behave irrationally when trying to obtain their "fix".
R10361779
3/5/2012 01:30:51 pm
I completely agree with your statement. Yes, people always have choices when deciding what to eat but that doesn't mean everyone will make the right, healthy choice. Most people would rather just go pick something up instead of taking the time to make something. The problem with this is that most of your fast food places are going to be cheaper but with higher calories and healthier choices such as salad, vegetables or fruit are going to be more costly. I too agree that cigarettes are an addiction and it takes time to come off of them, leading to people choosing their addiction over a meal just to get their nicotine for the day.
R10394446
3/5/2012 04:58:30 am
I don't think the word tax should be getting thrown around, government show only have a few responsibilities, making fat foods more expensive is not one of them. The fact that we give all that money to the corn business doesn't make sense either, if the market doesn't want corn (ethanol) then the market doesn't want it. If there is a need in the market, private business will fill the gap in seek of profits. I guess the whole point is that people will do anything to put their responsibilities on the shoulders of others. (tax payers) I will decide what kind of eating habits my kids learn, I don't want any government influence on that decision. But everybody is a victim nowadays, most people will never understand the significance of this seemingly harmless intervention of government, but it all adds up over time.
R10403116
3/6/2012 07:16:51 am
I fully agree with the argument you are making. If we start to allow the government to start making decisions for us because they think it will “help us,” then we might as well be giving up all of our personal rights. It might start with little things like the fat tax, but that could eventually lead to the government telling us what cars to drive or where we can travel.
R104302929
3/5/2012 10:43:35 am
I can easily see how the recession could have either effect on your waist line, but to me it seems to come down to either you are lazy or you are not. I don't mean this in the typical way of "the only way to stay healthy is to be active." I mean really, has anyone else seen or even heard of Extreme Couponers? Just kidding! However, I have witnessed many families who have much higher family incomes than my own; however, they spend way less on food. This all comes down to their willingness to plan and make economically sound choices when purchasing food. The general strategy I have gathered from these families is to set aside a small amount of time each week to look at sales ads at the grocery stores and plan meals based on the sales instead of eating out. My family eats out a lot, and to me it makes more sense to go from eating out to being less lazy and cooking at home. This way you can save money and your health. Also, I know I can prepare burgers and fries for my whole family cheaper than I could buy them at Wendy's or McDonald's (excluding the value menu of course, because men of my fathers stature laugh in the face of tiny burgers). Of course most of this may come down to personal preference, but when cooking at home and fast food are of comparable prices, the over all better option for your health and possibly for pocket book is cooking at home.
Alfredo Galvan
3/5/2012 12:20:16 pm
There is no doubt that income elasticity plays a big role in our diets especially with today’s economy. If a person’s income goes down he or she is going to replace some normal goods with inferior goods, in this case the inferior good is a high calorie fast food meal. Cigarettes and food are not compliments the fact that cigarettes reduce a person’s appetite, has nothing to do with the amount of money that is going to be spent on food.
10469266
3/6/2012 05:44:54 am
Generally higher priced goods are going to be created in a way that better suits the consumer, whether that's for health reasons or for taste reasons. Lower priced food is always going to have lower amounts of effort being put into them, mostly due to the reduced price, and in this way they're generally quite a bit more unhealthy for the public's consumption.
R10480114
3/6/2012 05:45:50 am
The cross price elasticity coefficient between food and cigarettes would by definition be negative for an avid smoker who consumes both goods, although for those who just kicked the habit it would be positive. For non smokers there would be no CPE due to the fact that one of the variables is inapplicable to them. With a lower income cheap foods and cigarettes would see a positive income elasticity. Cigarettes might have a negative income elasticity depending on the consumer. I would say the "income effect" would play a vital role in the process of determining the quantity of cheap food one would consume.Decrease in income = increase in Qd of cheap foods and an Increase in income = decrease in Qd of cheap foods.
R10407550
3/6/2012 07:16:06 am
If your income goes down you are no longer going to buy the more expensive fresh foods like fruits and vegtables. You are going to go to McDonalds and order off the dollar menu. This is obviously not healthy, and overtime you will gain weight. Also because of the recession the price of cigarettes has gone up because the taxes on them are higher. Like it said in the podcast, people that quit smoking tend to gain weight. So between the combination of the two people affected by the recession are consequently gaining weight.
R10371553
3/6/2012 07:22:49 am
I dont agree that because there is a recession that weight gain is going up. It is said that people are going to go more toward things such as McDonalds dollar menu and quick easy meals but instead of spending 5 dollar on one meal would it not make more sense to spend that 5 dollars on a loaf of bread and sandwich meat to save money? Just my thought process...
R10433679
3/6/2012 12:30:02 pm
I agree that the recession is making people look fat. Why? because I believe that since we are in a recession more and more people are finding it a lot cheaper to stop smoking or cut down on their smoking, doing this will cause people to want to do anything to satisfy their craving to smoke. People will turn towards potato chips, or any kind of un-healthy snack to keep them from smoking. This will eventually lead to them gaining weight because they are snacking as much as they can to get away from there crave for a cigaret or to help them save money and buy cheap snacks instead of cigarettes.
R00431212
3/6/2012 12:36:16 pm
Food that is less healthy it always cheaper in supermarkets. For example lean beef is more expensive that beef with a higher fat content. But I believe that in a recession (lower wages) people would be more inclined to prepare their own food from the home due to it being much cheaper. Food from restaurants is higher in fats because the businesses (more often than not) use the cheapest products available to maximize profit. As well restaurants use excess amounts of butter or oil or fats or anything to make food more delectable to the consumers so they will be more inclined to return. So I am not convinced that the recession is necessarily a direct cause for higher obesity rates because I believe that people would be more inclined to cook healthier foods themselves from their own homes.
Anthony Hall (R#10337293)
3/6/2012 12:38:54 pm
As an off-and-on smoker and someone with an extremely slim wallet, this podcast was pretty interesting to me, but it's hard for me to think of it in these hard economic terms like "cross-price elasticity coefficients" or anything.
R10363252
3/6/2012 12:49:09 pm
In particular, I know that when my income goes down, I am far more likely to go to the frozen burrito section than the produce. Also, as a working college student, Sonic is the perfect place to go when I have 0 time to eat.
10363571
3/6/2012 02:14:47 pm
I myself live off of ramen because it is cheap. when I get paid I go out to eat to Taco Bell or McDonalds because I get more for my buck. I recently go interviewed by a journalist at Sprouts an organic grocery store. She asked me questions about why I shop at Sprouts, my answer was because I saw in the add they had a special on water and it was right next to my work. But I feel that if organic or "healthy" food was cheaper people would by it more. But then that would make organic food normal good. Also the cost of healthy food is harder to maintain.
R00062662
3/6/2012 02:32:48 pm
As a smoker (and I once quit for 5 months) giving up smoking does cause weight gain, even if it is temporary. Addiction to nicotine is only one of the factors. You also develop an oral fixation, which is caused by associating the nicotine with your mouth. so when you give up the nicotine you over indulge in food to make up for it. The fat tax idea would, in my opinion, work. make healthier foods cheaper and easier to get and increase the price of "fatty" the market is going to swing toward the healthier foods. The only problem is that people, believe it or not, do not like to cook or prepare food, which makes the McDonalds option much more attractive. I say give the "fat tax" a shot. When cigarette prices sky-rocketed a couple years back I quit buying them altogether and I think a similar situation would occur if the tax was implemented.
Wesley Hayes
3/6/2012 02:54:55 pm
The Fat tax will not be incorporated because trying to create a sin tax on cheep food only to raise the prise on an inelastic good that people will continue to buy is ineffective. But giving tax breaks or subsidies to companies that provide a healthier choice to make healthier foods available to lower income families would be a step in the right direction.
R10425881
3/6/2012 04:35:42 pm
I really liked the podcast, increasing Taxes on 'fat food' would be unfair to poor people but the government should have better priorities than food choices of people, there are other ways the government could make money than that.
10372587
3/6/2012 11:42:58 pm
I don't believe that a tax on fast food will ever get passed. This is America we're talking to.. But it is sad when it is cheaper to buy unhealthy foods at jack in the box, but healthy groceries are so expensive.
10337145
3/6/2012 11:44:25 pm
I think there are definitely some small changes that could be made. If government was serious about taxing, if anything this tax should be minute especially if it is going to hit home with lower income families. But maybe this will prevent people in buying more than one serving?
R10402810
3/7/2012 12:33:06 am
I believe that the economy influences the way we eat but not in a good or bad way. Every person is different and so will respond to less cash flow in different ways. One person might decided to eat cheaper and fattier foods while another might decide to eat less or more cheap foods such as fruits instead of meats.
R10457271
3/7/2012 01:04:13 am
I completely agree with the argument, there are a lot of smaller problems with tax but i dont ever think that will get passed.
R10413060
3/23/2012 07:03:37 am
I think that the cheap foods can be related to the income effect because in this healing economy it’s easier for lower income families to feed their kids with cheap fast food. I got to see what first of the month really looked like when I came to school at Tech at the local Wal-Mart and it made me sick to see what the American tax dollars are going towards in their baskets. In today’s economy with gas prices showing no sign of relief, all commodities are suffering and your basic meet, eggs, and milk have all suffered a 15% increase due to oil problems. I really don’t think “change” will happen until Mr. Food Stamp is out of the White House and we attack the oil problem head on instead of calling oil an “energy source of the past” and bypassing talks of the pipeline.
R10413060
3/23/2012 07:21:30 am
Just to emphasize the oil issue… during 2011 we spent $24 billion on energy subsidies, with $16 billion of it on green energy subsidies like Solyndra that are failing with zero results, that’s a whole other rant though. I am all for green energy but we are not making the correct decisions to lower this debt that is creeping up to $16 trillion.
Nathan Clayton
4/5/2012 12:17:33 pm
I believe cheaper food is directly related to the income effect. Lower income families are more likely to purchase inferior goods or fattening foods. Considering that healthier foods or normal goods cost more, in a recession more fattening unhealthy foods will be purchased. Comments are closed.
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