22 2019, XXII, 1
Economics
DOI: 10.15240/ ul/001/2019-1-002
In oduc ion
An impo an heal h i nancing issue acing
Canada and o he OECD coun ies (OECD,
2017) a e he heal h consequences o obesi y.
S a is ics Canada (2014) epo s ha 51.6%
o adul Canadians we e o e weigh o obese
in 2009 compa ed o 53.6% in 2013. The
p opo ion o Canadians who a e o e weigh
di e s by sex, wi h 59.2% o Canadian males
o e weigh in 2009 compa ed o 62% in 2013
and 43.9% o emales o e weigh in 2009
compa ed o 45.1% in 2013. These inc eases
ha e led o calls o policies o con ol obesi y
(see Cla k e al., 2014).
These a es o obesi y a e based on he
body mass index (BMI) which is he a io
o weigh (in kilog ams) o he squa e o heigh
(in me e s). C an i eld (2007) uses he Canadian
Communi y Hea h Su ey (CCHS) o examine
he de e minan s o he body mass index
(BMI) o Canadians. Un o una ely, he e is
insu i cien in o ma ion in he CCHS da a on
he die a y beha iou o esponden s so ha
he way in which die s in l uence BMI canno
be di ec ly s udied using ha da ase . This lack
o in o ma ion on die a y choices is a common
ea u e o s udies ha measu e he BMI
o indi iduals. Fo example, he BMI da a used
by Goldman, Lakdawalla, and Zheng (2009)
also does no include obse a ions o he die s
o indi iduals.
One solu ion o his p oblem is o include he
p ices o die a y elemen s in place o quan i ies
since, while quan i ies may no ha e been
obse ed, p ices ypically a e. Nu ien p ices
a e included in he BMI s udies o Goldman,
Lakdawalla and Zheng (2009) and Cla k e al.
(2014) whe eas ood g oup p ices a e included
in s udies by Chou, G ossman and Sa e
(2004), Boizo -Szan ai and Fab ice (2005) and
S um and Da a (2005) and (2008). In his
s udy we discuss some conside a ions o he
de e mina ion o he app op ia e se o p ices
o use wi hin a s udy o obesi y. We compa e
he use o ood-g oup-p ices o nu ien -p ices.
By a he mos popula app oach in his a ea
o esea ch is he use o ood g oup p ices
(e.g., Chou, G ossman, & Sa e , 2004; Boizo -
Szan ai & Fab ice, 2005; S um & Da a , 2005;
2008; along wi h Bea y & LaF ance, 2005;
Chouina d e al., 2005; Smed, Jensen, &
Den e , 2007; Allais, Be ail, & Nichele, 2010).
Fewe s udies use nu ien p ices (Goldman,
Lakdawala, & Zheng, 2009; Cla k e al., 2014).
A heo e ical model de eloped by Chen e
al. (2004) explo es he ela ionship be ween
nu ien s and hype ension. Thei model clea ly
demons a es ha i nu ien s a e a de e minan
o a speci i c heal h ou come (hype ension,
in hei case) hen nu ien p ices a e he
mos app op ia e se o p ices o use. In hei
empi ical model hey do no use nu ien p ices
bu ood g oup p ices, p oposing ha hei
es ima ed model is a “ educed o m” model.
We asse ha Chen e al. (2004) a e co ec
in hei in e p e a ion o hei model and ha
ood g oup p ices included in obesi y s udies
lead o es ima es o a educed o m model and
nu ien p ices lead o es ima es o a “s uc u al”
model. Gi en his in e p e a ion, ood g oup
p ices can be used o es ima e he model i one
is in e es ed in a educed o m model o he
de e minan s o obesi y and nu ien p ices
should be used i one is in e es ed in es ima ing
a s uc u al model o obesi y ha is mo e
amenable o in e p e a ion o policy pu poses.
The dis inc ion is c i ical since educed o m
models allow o he es ima ion o o he non-
p ice a iables in he sys em o make su e he e
is no an “omi ed” a iable p oblem bu hey
a e less use ul o policy pu poses unless some
addi ional app oach is g a ed on o he s udy
o he pu pose o unco e ing he s uc u al
pa ame e s. Pa ame e es ima es om he use
FOOD PRICES, TAXES, AND OBESITY
IN CANADA AND ITS IMPLICATIONS
FOR FOOD TAXATION
S ephen J. Cla k, Ludwig O. Di ich, S ephen M. Law,
Dana S a á, Mi osla Ba ák
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23
1, XXII, 2019
Economics
o ood g oup p ices should no be used o make
judgemen s conce ning he heal h impac s o
axes on consump ion o oods om many o
he ood g oups because oo many ac o s a e
con ounded in he educed o m model ela ing
hose ood g oup p ices o he unde lying
nu ien s. We p o ide some examples o his
sho coming o he ood g oup app oach below.
The use o nu ien p ices is a mo e
p omising line o esea ch in his a ea since
his app oach cap u es he p ices o he speci i c
nu ien s hough o be causing undesi ed
heal h isks by nu i ionis s. The di i cul y wi h
nu ien p ices is ha hey a e no ypically
collec ed by s a is ical epo ing ins i u ions and
a e no di ec ly obse able. Nu ien p ices need
o be cons uc ed om exis ing da a bases and
linked o he obse a ions on expendi u es and
BMI. The goal o he s udy is o in oduce new
nu ien p ice model and shows i s supe io i y
o ood g oup model based on Canadian da a.
This s udy is o ganized as ollows. The
nex sec ion e iews ood policy in Canada,
speci i cally supply managemen egimes
and he axa ion o ood, and he ways in
which he s uc u e o hese policies e l ec s
conside a ion o heal h ou comes, i a all.
The ollowing sec ion e iews he li e a u e on
p ices o ood and nu ien s in s udies o obesi y
and o he heal h ou comes. This is ollowed
by a discussion o he da a and me hods. The
penul ima e sec ion discusses he esul s and
he i nal sec ion p o ides a discussion o policy
implica ions, ele ance o nu ien axa ion
model o o he coun ies and conclusions.
1. Food P ice and Tax Policies
in Canada and Thei Rela ionship
o Obesi y
While he e a e no ood policies in Canada
ha explici ly a ge obesi y in Canada, he e
a e se e al policies in place ha in l uence
he ela i e p ices o a ious oods in ela ion
o o he oods. T adi ionally, P o incial and
Fede al HST and GST axes in Canada ha e
exemp ed many oods. Howe e , he e a e
h ee majo a eas o ood axes ha a e
common o many p o incial and ede al axes
in Canada ha may in l uence obesi y: (1) Taxes
on es au an ood; (2) Taxes on con enience
ood; and (3) “Taxes” on ood ela ed o supply-
managed ood indus ies.
1.1 Taxes on Res au an Food
Res au an ood has been subjec o ede al
axes (GST) and p o incial axes (PST o he
p o incial componen o HST) in Canada.
In he obesi y li e a u e, hese axes a e oughly
compa able o axes on “ as ood” in he
li e a u e. The e o e, in as much as “ es au an ”
ood lines up o a ood g oup called “ as ood”,
Canada has had an obesi y ax o a long ime.
1.2 Taxes on Con enience Foods
Ano he obesi y ax ha is o en ad oca ed
in ela ed li e a u e is a ax on “junk” ood,
high a o high calo ic ood ha is hough
o con ibu e o obesi y. While he e a e no
ood axes in Canada ha explici ly a ge
“junk” ood o axing, HST o PST and GST
a e applied o u he -p ocessed oods, o
“con enience” oods. These axes a e une enly
and inconsis en ly applied i hey a e iewed
om he pe spec i e o axes whose pu pose
is o con ol obesi y. While his ca ego y does
co espond o se e al oods ha a e commonly
conside ed o be “junk” oods (e.g., po a o
chips), o he high a , high suga oods a e
un axed (e.g., ice c eam) and oods which a e
in ended o be obesi y- educing (such as Weigh
Wa che s® ozen ood dinne s) a e also axed.
Fu he mo e, he con enience ood axes a e
inconsis en ly applied o speci i c oods. Fo
example, indi idual cookies a e axed, whe eas
cookies pu chased in bags in quan i ies g ea e
han six cookies a e no (as long as hey a e no
indi idually w apped).
1.3 Supply Managemen Indus y Taxes
The i nal ca ego y o ood p ice inc eases (o
“ axes”) in Canada a e hose imposed on
consume s by he supply managed indus ies.
These include dai y, poul y, and egg p oduc s.
Fo a discussion o he ela i e size o hese
implici axes, see Ca dwell, Lawley and Xiang
(2015). In he case o poul y and egg p oduc s,
i is deba able whe he inc easing hei p ice
will dec ease obesi y, since hese p oduc s a e
o en singled ou as p oduc s ha con ibu e
o a heal hie die by nu i ionis s, especially
poul y p oduc s. To he ex en ha poul y and
eggs a e “good” oods, he implici axes om
supply managemen in hese indus ies migh be
conside ed obesogenic a he han lep ogenic.
P ice inc eases om supply managemen in he
dai y sec o a e a unique case om he poin o
iew o obesi y axes. Dai y supply managemen
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24 2019, XXII, 1
Economics
has wo impac s on consume s. The i s is he
usual ax on consume s om aising he e ail
p ice o dai y p oduc s o consume s. Fo hese
axes, since many dai y p oduc s a e high a
and he e o e lead o an obese ou come, dai y
axes p omo e a less obese socie y. The second
is he peculia way dai y quo a is alloca ed
on he basis o he a con en o milk. This
alloca ion sys em lowe s he amoun o dai y a
ha en e s he sys em. None o hese axes a e
explici ly imposed o p omo e heal hy ea ing on
he pa o consume s. The e o e, hey do no
necessa ily a ge he nu ien s esponsible o
causing obesi y in Canada. Cla k and Di ich
(2010) a gue ha nu ien axes (e.g., axes on
he a con en o ood) be e a ge he p oblem
han do ood g oup axes (i.e., axes on ood
composi es) and he e o e nu ien axes a e
mo e e ec i e as a means o p omo e less
obesi y. All o he axes in Canada, wi h he
excep ion o he alloca ion o milk quo as by a
con en , a e ood g oup axes. The p oblem o
wha p ices a e app op ia e o obesi y s udies
is discussed in he nex sec ion.
Tab. 1 summa izes ood axes on
con enience oods and es au an oods by
p o ince in Canada oge he wi h he a e age
BMI by p o ince. The able sugges s ha
he e is no consis en s o y ha can be old
ha ela es he le el o he sales axes on
con enience oods and es au an oods in
Canada o obesi y. Fo example, Albe a has
he lowes a e o axes on con enience and
es au an oods in Canada and Albe ans
ha e he lowes a e age BMI in he coun y,
while A lan ic Canada has he highes axes on
es au an and con enience oods and A lan ic
Canadians a e among he highes a e age BMI
in he coun y. This indica es ha he e could be
conside able con ounding om simul aneous
posi i e and nega i e e ec s appea ing in he
aw co ela ions o es au an and con enience
ood axes wi h he BMI o Canadians. In On a io
es au an s meals a e exemp om p o incial
ax i expendi u e a e less han 4 CND.
2. P ices in Obesi y S udies
The empi ical li e a u e in his a ea is p ima ily
composed o s udies which ha e concen a ed
on es ima ing he educed o m ela ionship
be ween ood g oup p ices and an obesogenic
( ha is, “obesi y-inc easing”) nu ien o die a y
elemen , such as a , ca bohyd a es, o calo ies.
The mos common app oach (Huang, 1996;
Bea y & LaF ance, 2005; Chouina d e al.,
2005; Smed, Jensen, & Den e , 2007; Allais,
Be ail, & Nichele, 2010) is o ela e he educed
o he obesogenic nu ien o o e all demand
o he ood g oup p oduc by combining
he a e age nu ien con en o ood in i xed
p opo ions wi h he o e all quan i y demanded
o he ood g oup o p oceed om a educed
o m model o ood demand o a s uc u al
model o nu ien demand.
P o ince P o incial Tax Fede al Tax Combined Tax A e age BMI
in 2010
Albe a n.a. 5% 5% 25.987
Saska chewan n.a. 5% 5% 26.862
B i ish Columbia 7% 5% 12% 27.411
Mani oba 8% 5% 13% 27.361
New B unswick 8% 5% 13% 27.657
New oundland &Lab ado 8% 5% 13% 27.839
On a io 8% 5% 13% 26.746
P ince Edwa d Island 9% 5% 14% 26.984
Quebec 9.975% 5% 14.975% 26.001
No a Sco ia 10% 5% 15% 27.238
Sou ce: own calcula ion based on S a is ics Canada
Tab. 1: A e age BMI (2010) and ax a es o es au an meals and con enience oods
in Canada (as o May 2015)
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1, XXII, 2019
Economics
This app oach has h ee ad an ages.
Fi s , demand elas ici ies om ood demand
sys ems can be used o de i e he esponse
o consump ion o he obesogenic nu ien o
changes in ood g oup p ices. Second, gi en
he i xed p opo ions assump ion, a demand
elas ici y o he obesogenic (o combina ions
o obesogenic) nu ien p ices can also be
es ablished. The i xed p opo ions assump ion
allows an analysis o ei he he e ec o
changes o a ood g oup p ice o nu ien p ice
on consump ion, while empi ically using only
ood g oup p ices o es ima e he ood demand
sys em. Thi d, es ima es o ela ionships
can be es ablished using exis ing demand
sys em es ima es which ha e been in ensi ely
s udied and so excellen es ima es o demand
elas ici ies a e a ailable.
The e a e h ee p oblems wi h his app oach.
Fi s , he assump ion o i xed p opo ions be ween
he o e all elas ici y and he obesogenic nu ien
ha allows o he cons uc ion o a s uc u al
elas ici y om a educed o m o a s uc u al
elas ici y is a main ained hypo hesis ha may
no be alid. This app oach allows o ac oss-
g oup subs i u ions o obesogenic nu ien s bu
does no allow o wi hin-g oup subs i u ions o
nu ien s. Cla k and Di ich (2010) obse e ha
ood g oups ha e a la ge numbe o elemen a y
goods and ha wi h changes in p ice subs i u ions
o nu ien s wi hin g oups commonly ake place.
Second, he ood demand sys ems
ypically es ima ed a e based on a -home
ood expendi u e da a. This means a la ge
ca ego y o ood expendi u es ha may a ec
obesi y is no cap u ed in he analysis. This
ca ego y comp ises 50% o ood expendi u es
in he US in 2014 (Uni ed S a es Depa men o
Ag icul u e). The assump ion ha an a -home
dai y elas ici y adequa ely cap u es he away-
om-home dai y elas ici y seems dubious a
bes since he die a y habi s o consume s wi h
espec o a -home and away- om-home ood
a e p obably much di e en . Fo example, ood
away- om-home may be conside ed a “ ea ”
whe e ypical a -home ules o die a y discipline
do no apply. Also, consume s ha e less
con ol o nu ien in ake om away- om-home
ood han a -home ood. Fu he mo e, e en i
a ca ego y in ood demand sys ems es ima ed
an away- om-home ood demand elas ici y,
his could no be combined wi h nu ien da a,
since nu ien da a a e de eloped using a -
home ood g oups and no away- om-home
ood g oups. Fo example, while he e a e da a
on agg ega e a le els in he ood g oup “dai y”
o a -home consump ion, he e a e no da a on
a p opo ions in he co esponding away- om-
home ood g oup.
Thi d, ood demand sys ems in o m us
abou he ood pu chases by consume s, bu
hey may no ell us e y much abou wha
is ac ually ea en and his is wha ul ima ely
in e es s us o a s udy o obesi y. In o he s
wo ds, es ima ing elas ici ies o nu ien s
pu chased by consume s, which is wha hese
s udies ac ually do, may ell us li le abou
obesi y. Kan o e al. (1997) es ima e ha
26% o ood pu chased by Ame icans is no
consumed bu en e s he economy as ood
was e. Encou aging consume s o ea mo e
esh ui s and ege ables as a way o educe
obesi y may no be as e ec i e as hypo hesized
i 32% o pu chased esh ui s and ege ables
a e no consumed bu was ed (Kan o e al.,
1997). Fu he mo e, ood was e o esh ui s
and ege ables may be much highe a he
ma gin. The e o e, combining an a -home ui s
and ege ables elas ici y o demand in i xed
p opo ions wi h he a e age nu ien con en
in ui s and ege ables p obably o e es ima es
he impac on obesi y o a pa icula nu ien .
Cla k and Le edahl (2006) and Xu (2010)
show how he p oblem o i xed p opo ions
can be o e come empi ically by eg essing
nu ien s on ood g oup p ices. These
es ima ions gene a e a se o elas ici ies o
nu ien esponse o ood g oup p ices. Va iable
p opo ions allows o wi hin-g oup subs i u ions
o nu ien s and he model does no use ood
expendi u e da a o gene a e elas ici ies o
nu ien s o ood g oup p ices and so nu ien
quan i ies include bo h ood a -home and away-
om-home ood g oups.
While he a iable p opo ions app oach
seems p omising, i has no pe o med
pa icula ly well empi ically in ea lie s udies.
Fo example, Xu (2010) does no i nd subs an ial
s a is ical signi i cance om es ima ing a ,
ca bohyd a e, and calo ie elas ici y es ima es
om ood g oup p ices using US da a. While
Cla k and Le edahl (2006) do i nd a s a is ically
signi i can ela ionship be ween a and mea
p ices, he mea g oup is no pa icula ly s iking
as a majo sou ce o a causing obesi y. Nei he
o hese s udies includes nu ien p ices in he
analysis. Also, hese es ima es only include
elas ici ies o ood disappea ance o nu ien s
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26 2019, XXII, 1
Economics
o p ices, and no es ima es o nu ien s ea en,
and he e o e was e is no conside ed. Bea y
(2007) uses an en opy app oach o gene a e
shadow p ices o nu ien s bu he es ima es
a e s ill based on only ood a -home demand
elas ici ies.
Ano he popula app oach is o measu e he
heal h ou come di ec ly a he han indi ec ly
h ough changes in some obesogenic nu ien ,
such as a om ood pu chased o a -home
consump ion. Fo example, he e a e se e al
s udies ha ela e he BMI o popula ions o
a ious socio-economic a iables including
p ices o ele an goods (e.g., Chou e al.,
2004; Boizo -Szan ai, & Fab ice, 2005; S um
& Da a , 2005; 2008; Auld & Powell, 2009;
Goldman, Lakdawalla, & Zheng, 2009; Cla k,
e al., 2014). Chen e al. (2002) use simila
me hods o examine blood p essu e.
A common ea u e o he BMI da a used
in hese s udies is ha in o ma ion on nu ien
in ake is una ailable, and so p ices a e included
in place o quan i ies. A basic ques ion o hese
s udies, and seldom discussed, is wha p ices
ough o be included in BMI s udies? Two ypes
o p ices a e examined in his s udy: nu ien
p ices and ood g oup p ices. Chen e al. (2002)
demons a e ha he use o ood g oup p ices
esul s in es ima ion o he educed o m model
and nu ien p ices es ima e he s uc u al
model. Which p ices bes cap u e nu ien s
in die s as hey ela e o obesi y is discussed
in Cla k and Di ich (2010) who a gue ha
nu ien p ices be e cap u e he e ec s o
axes o con ol obesi y han ood g oup p ices.
Bea y (2007) implies ha he app op ia e
p ice is a nu ien p ice in his s udy o de elop
shadow alues o nu ien s. Chen e al. (2002)
de elop a heo e ical model in which blood
p essu e is he heal h ou come and conclude
ha nu ien p ices a e app op ia e o es ima e
he s uc u al model which in u n iden i i es
pa ame e s ha can be used om a policy
pe spec i e. The ood p ice model is a educed
o m model om which he coe i cien es ima es
a e subjec o con ounding o nu ien e ec s
wi hin and ac oss ood g oups. Chen e al.
(2002) call nu ien p ices “implici ” p ices in
hei model, and his e m highligh s he ac
ha nu ien p ices a e no eadily a ailable.
This could be one eason why hey es ima e
a model including ood g oup p ices a he han
a model including nu ien p ices. Goldman,
Lakdawalla and Zheng (2009) show how da a
on ood expendi u es, p ices o ood g oups,
and ood disappea ance o nu ien s can be
used o gene a e nu ien p ices ( o a -home
ood consump ion). In his s udy we es ima e
wo models, one including nu ien p ices
and he o he including ood g oup p ices, o
compa e he empi ical pe o mance o he wo
app oaches.
3. Me hods and Da a
The me hodology is based on he p e ious wo k
o Cla k e al. (2014). Da a on BMI o Canadian
adul s (eigh een yea s o age o olde ),
socio-economic da a and o he da a ela ed
o indi idual heal h s a us o indi iduals is
a ailable om he pe sonal cha ac e is ics da a
ha comes om Canadian Communi y Heal h
Su ey (CCHS) (S a is ics Canada, 2012b) and
he pe sonal heal h indica o s o Canadians
(S a is ics Canada, 2012c). The CCHS is
an annual su ey con aining in o ma ion on
heal h s a us, heal h ca e u iliza ion and heal h
de e minan s o he Canadian popula ion
g ea e han wel e yea s old. The a iables
included in his s udy om he CCHS su ey
included BMI, income, educa ion, age, gende ,
household size and a a ie y o heal h s a us
indica o s (see Cla k e al., 2014, pp. 252-253).
Cla k e al. (2014) a e ci ing Goldman,
Lakdawalla and Zheng (2009) who de elop
a o mula ha shows how ood disappea ance
da a on nu ien in ake can be combined wi h
ood expendi u e da a o de elop a p oxy o
a nu ien p ice. Speci i cally, hei o mula is
(1)
whe e NPli is nu ien p ice o he l h nu ien
( a , ca bohyd a es, p o ein) o he i h p o ince,
(New oundland, P ince Edwa d Island, No a
Sco ia, New B unswick, Quebec, On a io,
Mani oba, Saska chewan, Albe a, B i ish
Columbia and he e i o ies – Nuna u , Yukon
and he No hwes Te i o y – included in
a “p o ince” called No h Canada), Sij is he
expendi u e sha e o he j h ood g oup (milk;
cheese; eggs; ui ; ce eals; ege ables; bee ;
po k; poul y; i sh; suga and swee ene s;
a s and oils; and co ee and ea) in he i h
P o ince, expendi u e sha e is expendi u e
sha e o ood g oup j in P o ince i pe capi a
pe day (S a is ics Canada, 2012d; 2012e), Nl
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27
1, XXII, 2019
Economics
is nu ien ood disappea ance o he l h nu ien
pe capi a pe day (S a is ics Canada, 2012c)
and CPIij is consume p ice index o ood g oup
j in P o ince i (S a is ics Canada, 2012 ). In he
ood g oup p ice model, he CPIij o P o ince j
o he ollowing ood g oups a e used: dai y,
eggs, ui s and ege ables, eggs, ce eals, ed
mea s, poul y, i sh, suga and swee ene s, a s
and oils and es au an ood (S a is ics Canada,
2012 ). (see Cla k e al., 2014, p. 252).
No e ha a -home ood g oup expendi u e
sha e da a a e used o gene a e nu ien p ices.
This means ha p ices a e gene a ed o he
a -home ca ego y o nu ien p ices and do no
include he away- om-home sha e o he
nu ien in ood. This means ha measu es o
nu ien p ices used in his s udy a e dependen
upon he ood py amid agg ega ion sys em.
All o he da a a e o he yea o 2010,
excep he da a on nu ien ood disappea ance
(S a is ics Canada, 2012c), which is no
a ailable o 2010. We use he 2009 nu ien
ood disappea ance da a in Canada as a p oxy
o 2010. While i is no possible o know how
closely he 2009 da a p oxies o 2010 da a,
da a om The Cen e o Nu i ion and Public
Policy in he US indica e ha nu ien ood
disappea ance pe capi a changes e y slowly.
A e dele ing he obse a ions ha we e
eco ded as unknown, no applicable, e used
o answe o no s a ed, he sample consis s
o esponses om 39,805 Canadians eigh een
yea s o olde (see Cla k e al., 2014).
Food expendi u e da a and CPI da a we e
no a ailable o he No h egion, and so we use
a popula ion-weigh ed p ice o de e mine he
CPI in No h Canada and ega d he a e age
Canada expendi u e sha e as he expendi u e
sha e in No h Canada. Since so ew o he
esponde s o he CCHS we e om he No h
egion, he esul s did no change app eciably
when No he n egion’s esponses we e
excluded om conside a ion. These esul s
a e no shown, bu a ailable on eques . The
da a on p ices gene a ed om equa ion (1) a e
combined wi h BMI and o he socio-economic
and heal h s a us da a o es ima e he BMI
equa ions (see Cla k e al., 2014, p. 252). The
empi ical model es ima ed is:
(2)
whe e BMIki is body mass index o indi idual
k in P o ince i (S a is ics Canada, 2012b),
PCki is a ec o o pe sonal cha ac e is ics
da a o indi idual k in P o ince i, Pi is a ec o
o nu ien p ices o a ec o o ood g oup
p ices in P o ince i and β and γ a e ec o s o
pa ame e s o be es ima ed (Cla k e al., 2014).
4. Resul s and Obesi y Tax
Assessmen
The model is es ima ed in linea na u al
loga i hm o m, meaning ha pa ame e
es ima es a e elas ici ies. Tab. 2 p esen s
O dina y Leas Squa e (OLS) es ima es o he
educed o m ood g oup p ice model (elas ici y
es ima es in he 2nd column and - alues in he
3 d column) and he s uc u al nu ien p ice
model (elas ici y es ima es in he ou h column
and - alues in he i h column) esul ing
om es ima ing he OLS es ima es o he BMI
o Canadians in 2010. Obesogenic nu ien
p ices and ood g oup p ices ha e nega i e
coe i cien s and indica e ha a ax will lowe he
BMI o Canadians and lep ogenic nu ien p ices
and ood g oup p ices ha e posi i e coe i cien s
and indica e ha a subsidy will lowe he BMI o
Canadians.
As app op ia e de ices o ensu ing
o he pa ame e es ima es in he model a e
no biased, bo h models gi e simila esul s.
The elas ici y es ima es o all o he a iables
included in each model excep o p ice
a iables a e qui e simila , excep pe haps he
household size coe i cien , which is insigni i can
in bo h models.
The a ge ing p oblem discussed in he
p e ious sec ion is bo ne ou in he esul s
when we compa e he es ima ed elas ici ies o
he p ice coe i cien s be ween he wo models:
nu ien p ices a ge he sou ce o he nu ien
impac on BMI be e han do ood g oup p ices.
Based on s a is ical signi i cance, he nu ien
p ice model is supe io o he ood g oup p ice
model, since he p ice o ca bohyd a es, he
p ice o p o ein and he p ice o a a e highly
s a is ically signi i can . This is in con as o he
ood g oup p ice model whe e, o he nine ood
g oup p ices included in he model, only h ee,
he p ice o eggs, he p ice o a s and oils and
he p ice o es au an ood a e s a is ically
signi i can .
The esul s poin ou he dange s o
using g oup p ice elas ici ies in he place o
nu ien elas ici ies when making judgemen s
conce ning he e ec o public policies on ood
ou comes. Fo example, G ay e al. (2005) use
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28 2019, XXII, 1
Economics
Food G oup P ice
Model Nu ien P ice Model
Reg esso Es ima e - alue Es ima e - alue Reg esso *
In e cep 2.736 33.902 2.782 79.792
Age 0.039 10.831 0.038 10.475
Gende (Male = 1) 0.042 23.002 0.041 22.834
Ma ied (Yes = 1) 0.018 6.048 0.020 6.481
Common Law (Yes = 1) 0.015 4.387 0.014 4.064
Di o ced (Yes = 1) 0.003 0.816 0.003 0.918
Household Size 0.000 0.177 0.001 0.271
Educa ion -0.021 -3.846 -0.023 -4.363
Has Job 0.027 11.201 0.027 11.414
Income 0.006 3.550 0.006 3.459
Sel pe . heal h (5 = e y unheal hy) 0.064 30.078 0.064 30.160
Has As hma (Yes = 1) 0.030 9.500 0.030 9.433
Has A h i is (Yes = 1) 0.027 10.696 0.028 11.104
Has High Blood P essu e (Yes = 1) 0.070 28.357 0.071 28.549
Has Diabe es (Yes = 1) 0.087 24.094 0.087 24.190
Has Hea Disease (Yes = 1) -0.015 -3.598 -0.015 -3.541
Has Cance (Yes = 1) -0.028 -4.597 -0.028 -4.626
Dai y P ice -2.207 -1.004 -0.369 -11.923 Fa P ice
F ui s & Vege ables P ice -0.136 -0.337 -0.214 -10.359 Ca b. P ice
Red Mea s P ice 0.412 0.634 0.608 12.339 P o ein P ice
Egg P ice -2.262 -4.320
Ce eals P ice -0.464 -1.290
Poul y P ice -2.567 -1.782
Fish P ice 0.243 0.483
Suga & Swee ene s P ice -0.521 -1.775
Fa s & Oils P ice 1.629 2.359
Res au an Food P ice -0.647 -2.845
R20.143 0.140
F-S a is ic 255.100 339.800
Sou ce: own calcula ion based on S a is ics Canada
No e: *I di e en han ood g oup p ice model.
Tab. 2: OLS Es ima es o double log speci i ca ion o he BMI o Canadians, 2010
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29
1, XXII, 2019
Economics
an a -home ood expendi u e elas ici y o bu e ,
which is a de eloped om a sub-u ili y analysis
o he a s and oils ca ego y aken om Godda d
and Amuah (1989), in place o a a elas ici y
o dai y a o analyze he impac he Canadian
Milk Ma ke ing Boa d on he incidence o
hea disease on Canadians. The Godda d
and Amuah (1989) s udy did no conside he
kinds o c oss ood g oup subs i u ions he
consume s can make when hey buy ood om
supe ma ke s, anspo i o hei homes and
combine i wi h o he oods o p oduce meals
and ood was e. I he heal h ou come we e
obesi y a he han hea disease, he closes
elas ici y p esen ed in Tab. 2 o ha used by
G ay e al. (2005) would be o use ha elas ici y
on a s and oils p ice (1.629) in place o he
a p ice elas ici y (-0.369) o public policy
pu poses. One can see ha he wo bea no
esemblance o one ano he . In addi ion, hese
elas ici ies only conside a -home consump ion
o a s and oils, and no away- om-home
consump ion o a s and oils.
While he a s and oils elas ici y es ima e
seems nonsensical (since i is posi i e and
would imply a hin subsidy be placed on his
ood g oup), i may no be so absu d when
one conside s wha his elas ici y ac ually
measu es. The “ a s and oils” ca ego y includes
p oduc s like ege able oils used in salads.
Lowe ing he p ice o a s and oils could
po en ially lead o an inc ease in he pu chases
o ege ables as consume s ea mo e salads,
leading o a educ ion in BMI. This would mean
ha calo ic in ake, which inc eases wi h he
educ ion in he a s and oils p ice, is mo e han
o se by a educ ion in calo ic in ake wi h he
inc ease he consump ion o salads, especially
i he inc ease in he consump ion o salads
dec eases he consump ion o , say, F ench
ies.
The ambigui y and con ounded na u e
o nu ien s associa ed wi h he use o ood
g oup p ices in he educed o m model is
demons a ed in he 2nd and 3 d columns o
Tab. 2. Nega i e coe i cien s a e indica ed o
p ices o dai y, ui s and ege ables, ce eals,
eggs, suga and swee ene s, and es au an
ood. Howe e , only he eggs and es au an
p ice coe i cien s a e s a is ically signi i can .
A nega i e coe i cien indica es ha a ax on
he ood g oup should be e ec i e in educing
BMI and his esul seems coun e in ui i e
o ui s and ege ables, ce eals and poul y.
The BMI-dai y p ice ela ionship is elas ic
wi h an es ima e o -2.20, bu no s a is ically
signi i can . The nega i e coe i cien on
poul y p ice is unexpec ed, gi en ha many
nu i ionis s ha e sugges ed ha whi e mea s
a e supe io o ed mea s in p omo ing lowe
BMI. Taxing eggs would appea o be an
e ec i e way o educe he BMI o Canadians,
wi h an elas ici y es ima e o -2.26 and his
esul also seems coun e in ui i e gi en ha
eggs ha e been iden i i ed as a good sou ce o
p o ein. The coe i cien on suga & swee ene s
sugges s inelas ici y and a s a is ically
insigni i can impac on he BMI o Canadians,
indica ing a ax on his ood g oup would ha e
a small o negligible impac on educing he BMI
o Canadians. The es au an p ice coe i cien
is inelas ic and s a is ically signi i can indica ing
a ax on away- om-home ood would educe
he BMI o Canadians.
Food g oup p ice coe i cien s wi h a posi i e
coe i cien include ed mea s, i sh and a s and
oils, wi h a s and oils ha e he only s a is ically
signi i can coe i cien o 1.629. This conclusion
seems un easonable bu is a good example o
why es ima es coming om ood g oup p ice as
he basis o imposing axes o subsidies may
no be a good guide o public policy.
Elas ici y es ima es and - alues o nu ien
p ices a e p esen ed in columns 3 and 4 o
Tab. 2 espec i ely. Two obesogenic ( a and
ca bohyd a es) and one lep ogenic (p o ein)
nu ien a e included in he model. Bo h a
and ca bohyd a es elas ici ies a e nega i e
and s a is ically signi i can , indica ing hey a e
obesogenic nu ien s. P o ein is posi i e and
s a is ically signi i can , indica ing a lep ogenic
nu ien . These esul s a e consis en wi h
a p io i expec a ions. These esul s a e also
consis en wi h he model o Chen e al. (2002)
who ound ha nu ien p ices mo e accu a ely
e l ec he p ice o nu ien s in he die s o
consume s as hey ela e o obesi y han
do ood g oup p ices.
5. Discussion and Policy
Implica ions o Ac ual
and Po en ial Food Taxes
The esul s highligh he p oblem wi h using
ood g oup p ice elas ici y es ima es coming
om a educed o m model o obesi y. Many o
he ood g oup p ice coe i cien s a e s a is ically
insigni i can . The esul s a e consis en wi h
a small bu g owing empi ical li e a u e ha
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30 2019, XXII, 1
Economics
s udies he e ec o p ices on obesi y: nu ien
p ices a ge he unde lying nu i ional ac o s
he a ec he BMI o Canadians mo e accu a ely
han do ood g oup p ices.
The esul s o he nu ien p ice model
a e a mo e plausible o assess public policy
on obesi y axes. Ei he a ax on he a o
ca bohyd a e con en o ood o a subsidy on he
p o ein con en o ood would educe he obesi y
o Canadians; howe e , he elas ici y es ima es
a e small. The nu ien p ice in o ma ion could
also be used o impose a nu ien index ax on
ood, wi h he weigh s o his ax being 0.607 on
a , 0.352 on ca bohyd a es and -1 on p o ein
(no malizing by he p o ein elas ici y).
The esul s indica e ha axes on es au an
ood would educe he BMI o Canadians.
Gi en ha es au an ood is subjec o sales
axes, he esul s indica e ha exis ing axes
a e an e ec i e means o educe he BMI o
Canadians. Inasmuch as he p ice o es au an
ood is a good p oxy o “ as ood” hese esul s
suppo hose who ad oca e a “ a ” ax on as
ood as an e ec i e me hod o educe obesi y in
Canadians. Howe e , he es ima e is inelas ic,
indica ing ha his e ec is small and he e
could be subs an ial nu i ional con ounding
unde lying he es ima e ha make i an
un eliable as a guide o policy wi hou some
u he elabo a ion conce ning he nu i ional
link be ween which oods ha a e “ as ” a e
obesogenic and no lep ogenic.
The coe i cien s on he egg p ice, poul y
p ice, and dai y p ice se e as a guide o he
impac o implici ood axes om supply-
managed indus ies. The able indica es
ha axes on eggs a e an e ec i e means
o educing he BMI o Canadians and he
e ec is bo h s a is ically signi i can and
elas ic. This esul is also ue o he implici
ax on poul y om supply managemen
al hough his esul is s a is ically insigni i can .
Bo h o hese esul s a e con a y o popula
pe cep ion, whe e egg consump ion is o en
encou aged due o i s high p o ein con en and
poul y consump ion is encou aged due o i s
low a con en ela i e o o he mea s. This is
a case o con ounding which a ises in he use
o measu es o elemen a y ood consump ion
ins ead o meal consump ion (o , e en be e ,
nu ien consump ion). Fo example, i could
be ha eggs a e almos always cooked using
a high a me hod and consumed wi h o he high
calo ic oods such as b ead, po a oes, and ed
mea s. One could hink o simila con ounding
o poul y-mea based meals e l ec ed in he
es ima ed poul y p ice elas ici y.
The peculia na u e in which dai y supply
managemen ope a es implies ha he esul s
o bo h he ood g oup p ice and he nu ien
p ice model can be used o assess he implici
axes o he dai y supply managemen sys em.
Dai y supply managemen alloca es quo a
(and hus es ic s supply) on he basis o he
a con en o milk. This aspec o dai y supply
managemen es ic s he supply o a in he
sys em and inc eases he p ice o a in ood.
The BMI-elas ici y o a p ice o -0.369 is he
ele an elas ici y o his policy: a a ax is BMI-
educing. The dai y supply managemen sys em
also inc eases he p ice o dai y p oduc s o
consume s. This would lead o a educ ion
o a -home dai y p oduc s pu chased and
he es ima ed elas ici y o -2.207 o dai y
p ice would sugges ha his, oo, would lead
o a lowe BMI o Canadians. Howe e , he
es ima ed dai y ood g oup p ice elas ici y is no
s a is ically di e en om ze o.
Recommenda ions ela ed o heal hy
ea ing, o example, o ea mo e esh ui s and
ege ables and less a s and oils, a e e l ec ed
in changing ela i e p ices in he ood g oup
p ice. While his may be e ec i e in he a -home
ca ego y o ood o in l uence die a y choices, i
may no be e ec i e o he away- om-home
ood ca ego y and his ca ego y is a ising
p opo ion o consume expendi u es on ood.
The shi in consume p e e ences owa ds ood
away- om-home means ha he ade-o s in
ood ca ego ies ep esen ed by ood py amid
p ices may no help in he unde s anding o
he ise in obesi y which may be d i en mo e
by inc eased consump ion in he away- om-
home ca ego y compa ed o he a -home ood
ca ego y.
On he o he hand, he use o nu ien axes
and subsidies would p esumably a ec bo h
he a -home and away- om-home ca ego ies
o ood pu chase beha io o consume s and
he beha io o p oduce s as well, when hey
adjus p opo ions o nu ien s in ood when
ela i e nu ien p ices change. The p e e ence
o he use o nu ien p ices in s udies and
nu ien axes in p ac ice e l ec s a desi e o be
able o mo e ully unde s and and in l uence he
choice o ood a -home e sus ood away- om-
home as well as he choice be ween aw and
u he -p ocessed ood a supe ma ke s which
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