Simulating price subsidies on healthy foods in Mexico.

Abstract

Objective: To simulate the impact of a price subsidy (price reduction) on purchases of healthy foods with suboptimal consumption.

Design: We used data from the 2018 Mexican National Household Income and Expenditure Survey, a cross sectional study. We estimated own and cross price elasticities of the demand for food groups using a Linear Approximation of an Almost Ideal Demand System. Using the estimated elasticities, we derived changes in purchases associated with a 10, 20 and 30% price reduction in healthy food groups with suboptimal consumption. We also estimated prices reductions for these food group that would meet the recommendations of the Healthy Reference Diet (EAT-HRD) proposed by the EAT-Lancet commission.

Setting: Mexico (country).

Participants: A nationally representative sample of urban and rural households.

Results: Price reductions were associated with increases in quantity purchased between 9.4 to 28.3% for vegetables, 7.9 to 23.8% for fruits, 0.8 to 2.5% for legumes and 6.0 to 18.0% for fish. Higher reductions in prices would be needed to achieve the EAT-Lancet Commission's recommendations for food groups with suboptimal consumption in Mexico: a 39.7% reduction in prices for fruits, 20.0% for vegetables and 118.7% for legumes.

Conclusions: Our study shows that reductions in prices can lead to increases in purchases of healthier food options. More research is needed to assess the most cost-effective strategy to deliver subsidies using either conditional cash transfers, vouchers or food baskets provided to families or direct subsidies to producers.