Public policy in food markets: understanding advertising and choice inter-dependencies

Lead Research Organisation: Institute for Fiscal Studies
Department Name: IFS Research Team

Abstract

Across the OECD, more than one in two adults and one in six children are overweight or obese, with obesity rates predicted to rise in the coming years. Obesity and poor diet contribute to a range of health problems, which increases the burden on publicly provided health services. There are substantial inequalities in the prevalence of diet related disease; for example, less educated women are two to three times more likely to be overweight than those with more education.

This has led many governments to introduce fiscal and regulatory policies aimed at improving nutrition. Common policies include: taxes to raise the price of unhealthy food and drink; restricting what can be advertised and when; and limiting the availability of fast foods. There is a growing evidence base on the impacts of these forms of intervention, but it remains far from complete.

In order to determine which policies are likely to be effective, we need to understand how people choose what to eat and drink, and how firms set prices, advertising and their product offering. A key component of people's purchasing behaviour is how what they buy today is affected by what they bought yesterday, or whether they saw an advert for a product last week. This dependence in decisions and experiences across time affects not only how individuals select what to buy, but also how firms set prices and choose how to advertise. Jointly, these market interactions will determine the effects of any government intervention on what's bought, and therefore what's eaten, and, ultimately, on health outcomes.

Through this research we will develop methods to study these interactions, and we will apply the framework that we develop to two applications of topical policy interest.

First, how does advertising affect people's food and drink purchasing choices, and how does this affect how firms choose to advertise. Modelling these decisions is challenging because of the complex and dynamic nature of advertising. If someone sees an advert for a product last week, or last month, this could still affect their decision to buy today. How it affects their decision is also complicated - does an advert for Coca Cola lead them to buy a Coke rather than Pepsi, or does it make them more likely to purchase any soft drink? Firms' decisions about how to advertise are both complex and interact with each other. Our objective is to harness data and computational developments to extend the literature to allow us to model the complexity of advertising competition in food and drink markets. Once we have estimated how people respond to advertising and how firms advertise, we can use the model to simulate counterfactual policies. For example, what would be the effect on prices, purchases and advertising if there was a change in tax policy, or advertising of certain products is restricted? These are questions that are currently of high interest to policymakers.

Our second application is to study people's fast food purchases; consumption of food outside the home, and fast food in particular, is a substantial source of calories and has been linked to weight gain in children. Relatively little is known about people's patterns of fast food consumption, mainly due to a lack of data covering these choices. We aim to fill this gap by exploiting novel data on out-of-home purchases, which has the additional advantage that it is linked to the household's grocery purchases. This will allow us to study whether people with a strong preference for fast food, or who are particularly responsive to price or advertising, are also people from households that purchase many or nutritionally poor quality calories. This is crucial in determining the efficacy of targeting policy at fast food consumption and determining which type of policy to use.

Publications

10 25 50
 
Description Taxes to reduce the consumption of sugar-sweetened beverages have been implemented by many jurisdictions, and restrictions on advertising are increasingly being considered. In our new working paper we study the impacts of a sugar-sweetened account for firms' price and advertising response. We use data on household brand-level advertising exposure, coupled with purchases and show that consumers that are particularly sensitive to price also tend to be more sensitive to advertising. This means that a tax leads the most advertising-sensitive consumers to switch away from taxed brands and reduces firms' incentives to advertise the taxed products. An advertising restriction on its own will have a relatively small impact on total sugar consumption from drinks.
Exploitation Route Unsure at this stage
Sectors Communities and Social Services/Policy

Healthcare

Government

Democracy and Justice

Retail

 
Description Presentation at University of Michigan, 2022 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Postgraduate students
Results and Impact Soda taxes and advertising dynamics
Year(s) Of Engagement Activity 2022
 
Description Presentation to the University of California, Berkley 2022 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Postgraduate students
Results and Impact Soda taxes and advertising dynamics
Year(s) Of Engagement Activity 2022
 
Description The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium - American Economic Association conference, New Orleans, January 2023 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Postgraduate students
Results and Impact Pierre Dubois presented the paper 'The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium' at the American Economic Association conference, New Orleans in front of around 50 attendees
Year(s) Of Engagement Activity 2023
 
Description The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium - CSIO TSE Conference, June 2022 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Postgraduate students
Results and Impact Pierre Dubois presented the paper 'The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium' at the CSIO TSE Conference in front of around 50 attendees
Year(s) Of Engagement Activity 2022
 
Description The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium - Florida State University Seminar, March 2023 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach Local
Primary Audience Postgraduate students
Results and Impact Pierre Dubois presented the paper 'The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium' at the Florida State University Seminar in front of around 25 attendees
Year(s) Of Engagement Activity 2023
 
Description The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium - Harvard Business School seminar, November 2023 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach Local
Primary Audience Postgraduate students
Results and Impact Pierre Dubois presented the paper 'The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium' at the Harvard Business School seminar in front of around 25 attendees
Year(s) Of Engagement Activity 2023
URL https://www.hbs.edu/faculty/research/seminars-conferences/Pages/event.aspx?num=2529
 
Description The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium - Helsinki Graduate School of Economics, Industrial Organization seminar, October 2023 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach Local
Primary Audience Postgraduate students
Results and Impact Pierre Dubois presented the paper 'The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium' at the Helsinki Graduate School of Economics, Industrial Organization seminar in front of around 25 attendees
Year(s) Of Engagement Activity 2023
 
Description The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium - Hong Kong University of Science and Technology Seminar, November 2022 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach Local
Primary Audience Postgraduate students
Results and Impact Pierre Dubois presented the paper 'The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium' at the Hong Kong University of Science and Technology Seminar in front of around 25 attendees.
Year(s) Of Engagement Activity 2022
 
Description The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium - IFS UCL LSE IO seminar, October 2022 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach Local
Primary Audience Postgraduate students
Results and Impact Pierre Dubois presented the paper 'The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium' at the IFS UCL LSE IO seminar in front of around 25 attendees.
Year(s) Of Engagement Activity 2022
 
Description The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium - IO Seminar, Stanford University, May 2022 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach Regional
Primary Audience Postgraduate students
Results and Impact Pierre Dubois presented the paper 'The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium' at the IO Seminar, Stanford University in front of around 25 attendees.
Year(s) Of Engagement Activity 2022
 
Description The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium - IO seminar, University of Mannheim, May 2022 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach Regional
Primary Audience Postgraduate students
Results and Impact Pierre Dubois presented the paper 'The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium' at the IO seminar, University of Mannheim in front of around 25 attendees.
Year(s) Of Engagement Activity 2022
 
Description The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium - International Workshop on Quantifying the impact of food and lifestyle policies, Rimini, September 2021 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Postgraduate students
Results and Impact Pierre Dubois presented the paper 'The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium' at the International Workshop on Quantifying the impact of food and lifestyle policies in Rimini, Italy. There was approximately 50 attendees.
Year(s) Of Engagement Activity 2022
 
Description The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium - Leuven Summer Event, KU Leuven, June 2022 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Postgraduate students
Results and Impact Pierre Dubois presented the paper 'The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium' at the Leuven Summer Event, KU Leuven in front of around 50 attendees
Year(s) Of Engagement Activity 2022
URL https://feb.kuleuven.be/research/economics/ces/seminars/leuvensummerevent-2022
 
Description The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium - MaCCI-EPoS Workshop "Frontiers in Empirical Industrial Organization", August 2023 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach Regional
Primary Audience Postgraduate students
Results and Impact Pierre Dubois presented the paper 'The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium' at the MaCCI-EPoS Workshop "Frontiers in Empirical Industrial Organization" in front of around 50 attendees
Year(s) Of Engagement Activity 2023
 
Description The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium - Nothwestern University, Strategy Seminar, March 2023 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach Local
Primary Audience Postgraduate students
Results and Impact Pierre Dubois presented the paper 'The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium' at the Northwestern University, Strategy Seminar in front of around 25 attendees.
Year(s) Of Engagement Activity 2023
 
Description The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium - Stockholm School of Economics Seminar, November 2022 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Postgraduate students
Results and Impact Pierre Dubois presented the paper 'The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium' at the Stockholm School of Economics Seminar in front of around 25 attendees.
Year(s) Of Engagement Activity 2022
URL https://www.hhs.se/en/about-us/calendar/department-of-economics2/seminar-in-economics/2022/seminar-i...
 
Description The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium - University of Maryland, IO seminar, November 2023 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach Local
Primary Audience Postgraduate students
Results and Impact Pierre Dubois presented the paper 'The Effects of Sin Taxes and Advertising Restrictions in a Dynamic Equilibrium' at the University of Maryland, IO seminar in front of around 25 attendees.
Year(s) Of Engagement Activity 2023
URL https://www.econ.umd.edu/event/seminar-theoryioexperimental-pierre-dubois-toulouse-school-economics