Do the poor pay more for healthy food? an empirical economic analysis

Abstract

The economic question this study seeks to answer is why healthier food products are less expensive in some stores than in others and in some neighborhoods than others. The analysis builds upon the precedent of past retail food pricing studies that have been conducted in Southeastern Louisiana and in other parts of the country, by further examining disparities of retail food costs across store formats and neighborhoods with different demographic compositions. It utilizes a comparison of a general market basket of food items used in past studies and a "representative" market basket that is regionally specific to Southeastern Louisiana to see if the composition of a selected market basket of goods impacts results. Specifically, the objectives of this study are to: 1. Determine whether the cost of a market basket that is composed of more “representative” regional food items that meet the 2005 Dietary Guidelines for Americans (DGA) differs from that of a general market basket developed by Pennsylvania State University researchers to meet the Thrifty Food Plan menu based on the 1995 DGA. 2. Determine whether demographic characteristics of a neighborhood have an influence on the cost of a healthy market basket of foods in that neighborhood. 3. Determine whether demographic characteristics of a neighborhood have an influence on the competition of supermarkets in that neighborhood. 4. Determine whether store size, type, and competition influence the cost of a healthy market basket in Baton Rouge, LA. The results of the study show that neither the TFP nor the 2005 DGA market basket of food items cost more, on average, at stores that are located in lower income areas in the Baton Rouge, LA, metropolitan area. The composition of the market basket including more “representative,” regionally-specific food items does not notably impact results. It can be concluded that food costs are significantly influenced by the management structure and store format, with chain stores and supercenters having the lowest market basket costs. A visual inspection of the distribution of large grocery stores suggests that some areas are more disadvantaged than others, especially rural areas.