ECN 340 Lecture Notes - Lecture 12: Panera Bread, Price Drop, Relative Price
Chapter 12 – Fat Economics
Introduction:
- A Paeas pea oll (In North Carolina) has 720 calories and 38 grams of fat; its
iao hip soe, aloies ad gas of fat ad ee its edued fat
apple crunch muffin has 470 calories if only 12 grams of fat.
- If anyone is willing to dare to eat all these 3 items together, he/she would exceed
the daily recommended calorie and fat intake.
- With this pole hee ideed, its a highl ople problem to be solved in
economics.
- Economics unravels the puzzles addressing it in reduced form and stripped of the
multitude of complexities as it examines key forces at work on many people across
space and educational and social classes and over both long stretches of time and
shorter periods.
- fat is a goig eooi ad politial pole i the out.
- Americans adult today on average weight over than 26 pounds more did American
adults did back in 1960.
- These statistics have political ramifications because the added medical problems are
iposig a added ude o the atios health ae sste.
- fat eoo ill fous o foes that hae affeted the elatie pies of goods.
- With this topic, we need to pay attention to the price tag of the groceries and also
the menu prices at restaurants like Panera.
The Relative price of food:
- From a purely historical perspective, food prices have gradually escalated over time,
but higher prices may not have deterred people from eating more because the
pies of eethig else, alog ith peoples oial ioes hae outpaed pies.
- The economic way of thinking tells us that drive greater consumption and when it
comes to food, greater consumption often weight gain.
Cheap Food: in Comparison:
- Since, 1913, the CPI less food has marches steadily upward, increasing twenty-two-
fold by 2010. Surprisingly, the CPI for only food items for the same time period also
rose close to twenty-two-fold over the full 1913-2010 span.
- The relationship between the food prices and the cost of all the other goods that
families need or want have to be weighted.
- Relative food prices gyrated from 1913 to 2010 failing by 30% from the end of World
Wa I though the eal 9s, ad isig agai duig the Wold Wa II, tedig
slightly downward in the 1950s and 1960s, only upward in the early 1970s.
- Relative food prices dropped fairly dramatically between 1970 and 2000, the very
same period when American weight gain accelerated and then moves up modestly in
the first decade of this century
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When Food Costs Less, We Eat More:
- The rise in the obesity rate during the past 4 decades can be partially attributed to
the significant drop in the relative price of food; 17% decreased between its peak in
1975 to its low in the late 2000.
- Eooist, Daius Lakdaalla, foud that thees a food osuptio iease of
0.6% when the relative food prices declined 1%. During the same period, others
founds that lower relative food prices accounted for 55% of the growth in the
average adult BMI.
- In 2009, all researchers found that the effects of a price drop for a calorie on
consumption grows with time.
- In addition to technology, government policies also affect food supply, and in turn
food prices and consumption and, naturally, weight gain. However, the impact of the
full scope of government farm policies on crop prices and with gain has been mixed.
- Farm programs that have induced farmers to take land out of production for some
crops and tariffs on imported foods have held up the prices of other potentially
fattening food have muted and weight gain effect of the subsidy0induced greater
consumption of gain based products.
- More generally, the substantial worldwide rise in relative food export prices starting
after 3004 and continuing through 2010 has probably contributed to a slowdown in
peoples eight gai aoss the gloe ad to food iseuit ad starvation in parts
of the globe.
- Lakdawalla and Philipson also found evidence that state sales taxes on food can
affect the relative price of food, and in turn, the quantity of food consumed, as the
law of demand suggests.
- For most of the last half century, the prices of healthful and unhealthful foods
moved upward together, aside for the years between 1980s and mid 1990s when
the country experiences a jump in weight gain and the obesity rate. Researchers
have also found that more people consumed unhealthful foods and became more
obese as a consequence.
- Researcher founds that the changing relative prices of fast food and fruits and
vegetables between the late 1990s and early 200s might explain nor more than 5%
of the change in the BMIs an of the weight gains of the groups studied.
- In law of demand, a decrease in the relative price of healthful foods means more
healthful foods are bought.
- The eage ipat of pie o food osuptio ad eight gai a e eause
the eseahe ipat of pie o food consumption and weight gain may be
because the researchers focused on the price tags on foods, not on their full prices.
- The relative full price of unhealthful foods could be falling substantially while their
relative full price tags are falling little to none. Because the time required to prepare
unhealthful foods could be failing more than the time required to prepare healthful
foods
- Americans consume average of 331 calories per day. With no increase in exercise.
Longer Lives Mean Bigger Gains
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Document Summary
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