Obesity has reached epidemic proportions in the US, with two-third of adults and one in three children overweight or obese. Obesity has been linked to an increased risk of conditions such as heart disease and diabetes and is estimated to cause 112,000 deaths every year. In addition to compromising individual health, it imposes significant externalities through productivity losses and healthcare costs. Of the many proposals to reverse the obesity epidemic, the most contentious is the use of price-based interventions such as the "fat tax". Previous investigations of the efficacy of such initiatives in altering consumption behavior yielded contradictory findings. This article provides convincing evidence that a selective taxation mechanism that lowers the relative prices of healthier options, such that those price changes are reflected in shelf prices at the point-of-purchase, can serve as an effective health policy tool in the efforts to control obesity.
In supplementary analysis below, we combine county level data from the CDC with income measures from the Census. The analysis divides the counties into quintiles based on income, and plots selected health (and several other) outcomes. Explore the correlations between county income and various outcomes using the "Pick Outcome Variable" dropdown. County maps for obesity, diabetes, and various other variables can be seen from the second tab.