Evaluating the role of fiscal policy in improving diets and preventing chronic disease in Chile: impact evaluation and modelling

Chronic diseases (e.g. stroke, heart diseases, and diabetes) - often driven by unhealthy diets - account for a fast growing share of mortality and morbidity in developing countries. They impose not only a disease but also a substantial economic burden to the countries concerned. Chile is facing an enormous challenge to curb rising rates of obesity and diet-related ill-health. Much of this disease burden is affecting the poor more than the rich within Chile.
Making healthier choices more affordable - and unhealthier options more expensive - might appear as a promising option to tackle the problem. After all, using price incentives has been shown to work very effectively in the efforts to reduce tobacco and alcohol consumption, where tax policies have long been applied. Yet when it comes to using economic incentives to promote healthier diet choices, we are so far left with preciously little, convincing evidence on whether such tax or subsidy policies would in fact have the desired results. This is because the bulk of the "evidence" is based on hypothetical modelling of such policies, rather than on the evaluation of actual examples of cases where they have been implemented in the real world. Chile is one out of a handful of countries world-wide that have now - in September 2014 - implemented a price incentive for healthier diets. More specifically, the Chilean Government has increased the excise tax on sugar sweetened beverages (SSBs), while reducing the tax on what it considers as non-SSBs. This is a great and extremely rare opportunity to first of all evaluate whether this policy has worked over a comparatively short period of time (1 year).
Conducting such an evaluation is challenging and requires the use of methods that produce credible impact evidence, even though the policy has not been implemented as a randomised experiment (which is what would have happened if evaluating the effectiveness of a new drug). This is the case in many areas of public health, however, and there are methods out there that have been, and can be, applied. The other challenge is that suitable data is not readily at hand in many countries, including in Chile, to conduct such an analysis. There is, however, high quality, detailed household purchasing data routinely collected by certain commercial market research companies, and we strongly believe this is the only data that currently allows us to assess the policy impact. Such data is exceptionally fine-grained, providing information on essentially all take-home purchases of beverages made by a nationally representative set of households over several years before and after the Chilean policy entered into force.
Once we have evaluated whether the policy has 'worked', in terms of reducing unhealthy beverage purchasing, we then also want to know whether this short term effect translates into meaningful longer term health effects. This can only be done via complex modelling of the longer term consequences, and the team has the expertise and track record to develop such models. In addition, the Chilean Government is keen to explore further refinements to this policy. In order to directly inform such deliberations, we will use our model to also analyse a range of related tax or subsidy policies, again aimed at promoting healthier diets, which appear at least promising on the basis of existing evidence. We have established a suitable, two-way communication channel with the senior policymakers in the Ministry of Health that will help ensure that the kind of evidence we produce will answer to the knowledge needs of the Government, without unduly interfering with the research.
Overall, this research will contribute vital evidence not only to the Chilean government but also to many other low- and middle-income countries also facing the challenge of diet-related ill health and eager to understand the actual scope for fiscal policies in the promotion of healthier diets and the prevention of chronic diseases.

The proposed research aims primarily to inform the Chilean government, other governments in low, middle and high income countries, as well as relevant international organisations that play a key role in guiding and supporting health and fiscal policies in LMICs. The key information to be delivered is on the effectiveness of fiscal policies to achieve desired health behaviour change. Such change is much sought after, as countries are grappling with the fast growing burden of non-communicable diseases. We will provide relevant evidence by evaluating the impact of actual and hypothetical, diet-related tax policies and via targeted dissemination activities (including a policy report, capacity building workshops, and media releases - see 'Pathways to Impact' document).

The project effectively builds on the current, active policy debate around the scope for tax policy to sustainably change people's diets towards healthier options. From the outset of the research to dissemination and impact, the research will draw on the expertise of a high level Advisory Panel, which is composed of key research beneficiaries on the policy side, as well as leading researchers in the field.
The research team has already made links with key research beneficiaries through its existing research and policy networks. The research project is designed to address the policy interests among the member organisations listed below:
(a) The Government of Chile, in particular the Ministry of Health: Department of Strategic Development; and Department of Nutrition and Food

(b) International organisations, including the Organization for Economic Co-operation and Development (OECD) and the World Health Organization (Pan American Health Organization)

(c) Policy research institutions and networks, including the Institute of Nutrition and Food Technology at the University of Chile, the National Institute of Public Health of Mexico, and the Disease Control Priorities project (DCP3) based in the US.

These organisations have actively worked on the relevant policies, and our work will feed into their policy and research agenda.

By expanding the existing network and also by co-disseminating the research outcomes with the members, further potential beneficiaries will be identified, as described below.

Public sector beneficiaries
i. Governments in low, middle and high income countries who have implemented, planned, or considered related fiscal policies to promote healthier diets. This includes Mexico; a middle income country which has recently implemented a tax on sugar sweetened beverages.
ii. Other relevant international organisations (World Bank, IMF).

The outcome of the project will have direct implications for public health policy makers and international organisations that help national governments plan and implement the relevant policies.

Private and third sector beneficiaries
i. Healthcare and public health professionals
ii. Non-governmental organisations (NGO); non-profit organisations (NPO) delivering disease prevention programmes
iii. Grocery industry (food and beverages manufacturers and retailers)
iv. Foundations and charities (Bill and Melinda Gates Foundation, Wellcome Trust, Rockefeller Foundation)

The outcome of the research will inform individual health professionals and organisations, particularly those who are working in the broad field of the prevention of non-communicable diseases. Also, since fiscal policies directly affect the market, the industry (both manufacturers and retailer) are also key research beneficiaries in their marketing and retailing strategies as well as in developing and supplying healthier (and profitable) dietary products to the grocery market. Finally, global health funders routinely fund research on fiscal policies and thus should be interested in the research outcomes.