General equilibrium and obesity

I don’t usually do this, but I thought this was a fun paper:

In this paper, we use dynamic general equilibrium theory to derive the quantitative implications of a decline in the relative monetary and time costs of food prepared away from home on the caloric intake by American households. Motivated by the empirical literature, we consider two channels that lower the relative costs of food prepared away from home. One is productivity improvements in the production of processed foods. The second is actual declines in income taxes and in the gender wage gap, which increases the opportunity cost of cooking at home from scratch. Households respond optimally to this decline in relative costs by consuming more food prepared away from home.

Why are Americans getting fatter? Because they’re eating out more and eating at restaurants leads to more intake of calories. Why are they eating out more? A little bit of it is the increasing availability of cheap restaurant food (like Micky D’s), but mostly its because of increasing opportunity costs. Income taxes have gone down making it more profitable to work outside the home so people don’t have time to cook. Also, gender wage disparities have decreased. Equalization of pay between the genders means women find working to be more profitable than making dinner for the family. Men aren’t picking up the slack; the lazy bastards do a whopping 11-15 minutes a day of food preparation in the home.

BTW, Americans have been basically sedentary since the 70’s so this can’t explain increasing obesity since then.

UPDATE: It just occurred to me that Megan didn’t bring up opportunity costs when discussing NYC’s effect on diet in her latest divalog. They talked about peer effects (which may be how agents find the dynamic equilibrium). I wonder why NYC is an exception to the story told in this paper. Maybe the high calorie/eating out connection is broken at high income levels. This makes sense because “good” restaurant food is probably a normal good. This would have a mitigating effect on the results of the paper.

The paper really shows a relationship between eating out and opportunity costs. The claims about obesity stand (and probably fall… at least a bit) on the assumption that eating out always means eating more calories.

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