Food consumption, Advertising and Dynamics

The aim of the proposed research is to better understand individual behaviour in food markets, and to provide new evidence on the potential impacts of proposed policy interventions that seek to improve nutritional outcomes. Our focus will be on understanding what form preferences take and what factors might influence preference formation. We will extend economic models of food choice to reflect potential non-standard features of behaviour such as habits and temptation and we will also study the effects on decision making of advertising. To study habit formation, we will use food purchasing information on migrants and on children and their parents. We will study how we can incorporate behavioural biases such as temptation and self-control into the standard economic models of demand and use information on purchases people make for immediate and future consumption to estimate these models. We will also allow for potentially persuasive effects of advertising on consumers' choices. Finally, we will use these new models of demand to carry out ex ante policy evaluation of reforms that change relative prices or costs to study how the existence of habits formation or behavioural biases effect the potential impact of policy reform. When considering such policy counterfactuals we will analyse firm behaviour, accounting for dynamic strategic interactions between firms, in order to assess the long run impact on both demand and supply of government policy (such as taxes).

The beneficiaries of this work will include the researchers involved in the project and at the host institutions, the broader academic community, policymakers (specifically, in the UK Department of Health), the media and the general public.

The researchers involved in the project will benefit by developing their skills and research capacity. In particular, the junior researcher, Kate Smith, who is involved in the project will benefit through the opportunity to work with senior academics at both institutes, to develop new econometric and computational skills and to extend her research networks. She will also benefit by engaging in dissemination activities to maximise the impact of our research outside of the academic community.

The academic community more broadly will benefit through the development of new methods and computational techniques, as detailed in the Case for Support. Policymakers will directly benefit from the research findings. This project will provide them with better evaluation of a number of proposed policy interventions. The methods and tools developed under these projects will help us to analyse a range of policies. For example, there is broad interest in the long run impact of taxes on food consumption - is the long run impact different from the short run impact because it takes time for consumers to adjust habits? There is also interest in how pricing and advertising by firms in the food market would respond to the introduction of taxes. Our research will help us to understand what impact these interventions will have and how the impact varies across different types of households and individuals. What type of person responds to these initiates - are children or poorer households getting the benefits, or is the main impact on educated households?

The media will find the results of the policy evaluations of interest, and we expect that they will receive widespread coverage. The issues around food and nutrition and how policy should react to the rising problems associated with diet related disease have received widespread coverage in the media, and we expect that they will continue to do so. The general public will benefit from the research in that it will lead to a better understanding of an issue of major current public concern. IFS has an excellent record of effective communication with both academic and non-academic users. As well as publishing in top academic journals, we will publish non-technical summaries and reports of all relevant research findings. These will be made freely available via our website and advertised through press releases and our Twitter account, which are regularly accessed by the general public, and in particular by A-level and undergraduate students. We will present research findings at academic and policy conferences, and we will participate in policy discussions of various types. We will liaise with contacts at the Department of Health and aim to involve them in the early stages of our research, using their expertise to help set our specific research agenda. We will meet with politicians, policymakers, charities and other bodies to discuss our ongoing research findings. Each year of this project we will hold a workshop at the IFS, which will aim to disseminate findings and discuss the research. We will involve policymakers and academics in these workshops.