Food Prices and Overweight Patterns in Italy

Luca Pieroni1, Donatella Lanari1, Luca Salmasi 1
1Department of Economics, Finance and Statistics, University of Perugia, Italy, 2University of Rome-La Sapienza, Italy, 3University of Verona, Italy

In this paper we examine the role of relative food prices in determining the recent increase in body weights in Italy. Cross-price elasticities of unhealthy and healthy foods estimated by a demand system provide a coherent framework to evaluate substitution effects if a close association is assumed between unhealthy (healthy) foods and more (less) energy dense foods. We use a dataset constructed from a series of cross-sections of the Italian Household Budget Survey (1997-2005) to obtain the variables of the demand system by a regional price index. We find that the relative growth of healthy food prices produces nontrivial elasticities of substitution towards a higher relative consumption of unhealthy foods with effects on weight outcomes. Additionally, these changes are unevenly distributed among individuals and result particularly relevant for those who are poorer and with a lower education.

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