Fast Food Prices, Obesity, and the Minimum Wage

Abstract

Recent proposals argue that a fast food tax may be an effective policy lever for reducing population weight. Although there is growing evidence for a negative association between fast food prices and weight among adolescents, less is known about adults. That any measured relationship to date is causal is unclear because there has been no attempt to separate variation in prices on the demand side from that on the supply side. We argue that the minimum wage is an exogenous source of variation in fast food prices that, after controlling for household income, approximates a tax on fast food. In two-stage least-squares analyses, we find little evidence that fast food price changes affect adult BMI or obesity prevalence. Over the entire population and important subgroups, results are robust to including controls for area and time fixed effects, demographic characteristics, substitute prices, and numbers of establishments and employment in related industries.