1. Explaining Disparities in the Cost of Healthier Food Karen M. Jetter and Diana L. Cassady Select Paper Presented at the AAEA meetings Denver, Colorado August 2, 2004

2. Introduction This study compares the cost of a standard market basket of food items to a market basket with healthier substitutes. –Example: 100% whole wheat bread vs white bread. Identifies the source of price differences within stores.

3. Motivation Wanted to examine the environmental factors that influenced the decision to purchase healthier food in low-income areas. Public health literature - hypothesized that it is the lack of availability in grocery stores. –If healthier options available, people would be able to buy them.

4. Motivation Implies sub-optimal behavior by store managers. If profitable to stock a variety of healthier items in lower income neighborhoods, they would be there. Developed a study to survey stores on the availability and price of healthier items.

5. Study This study compares the cost of three market baskets of food items: –Thrifty Food Plan –Healthier Substitutes –Less Healthy Substitutes

6. Thrifty Food Plan (TFP) Developed to show how food stamp recipients can meet the recommendations of the Food Pyramid Guidelines on their monthly food stamp allocations. Developed two weeks of menus and a shopping list to accompany.

7. Substitutions

8. Survey Grocery stores surveyed in Sacramento and Los Angeles. 3 surveys complete: June 2003, Sept/Oct 2003, March/April 2004. 13 stores in Sacramento and 12 stores in Los Angeles surveyed each time.

9. Survey Picked stores by neighborhood median income and type. –Very low≈ mid $20,000 –Low≈ $32,000 - $37,000 –Medium≈ $42,000 - $49,000 –Highover $53,000 –Small independent, bulk supermarket, chain supermarket.

10. Survey Sacramento: –Unable to find 6 grocery stores in very low neighborhoods –4 very low, 5 low, 2 each medium and high –3 small independent, 2 bulk items, 8 chain Los Angeles: –6 stores very low, 2 each low, medium and high –No small independent, 3 bulk items, 9 chain

11. Survey 75 stores surveyed Surveyors recorded the lowest price per unit in the market that day. Collected label information on –Fiber content –Fat content: saturated and unsaturated –Serving sizes

12. Results

14. How much more expensive is the healthier basket?

15. Where are the differences?

16. Why do we observe these differences? Meat: –As the fat content of ground beef and ground turkey increases, the price per pound falls. –“Family” packs of ground beef more likely to be in higher fat varieties. –Skinless poultry is more expensive than poultry with skin.

17. Why do we observe these differences? Breads –Figures actually represent the difference in the price between a brand name commodity and a store/generic brand. –Cannot find 100% whole wheat products that are store brands.

18. Differences by Store Type

19. Additional Considerations If surveyor treated poorly by store personnel (refused survey, followed), chain supermarket in lower income neighborhood. If store was dirtier than usual, lacked 100% whole wheat breads, produce not fresh, no organic produce offered, or poor refrigeration, the store was in a lower income neighborhood. Surveyors who shopped in small stores in lower income neighborhoods more likely to say that produce of good quality than P.I. who checked out store.

20. Conclusions Healthier alternatives are more expensive –Healthier market basket is up to one third more expensive than the Thrifty Food Plan Basket. Majority of difference is that healthier alternatives that are only available as name brands, or in smaller sized packages. Remaining differences due to fat content in meat and poultry. Higher fat products cost less.