Does banning use of food stamps for soda reduce obesity?

(George Frey – BLOOMBERG)

New York City’s now-rejected push to ban the use of food stamps to purchase soda was a political pariah from the get-go. The proposal, sent to the Obama administration last fall, had the relatively rare ability to draw the ire of both soft drink lobbyists and advocates for the poor and underfed.

On Friday, the USDA shot down the idea, which would have required a waiver from the food stamps program. In a letter to a New York state official, quoted by the New York Times, the Agriculture Department “wrote that the waiver the city sought was denied because of the logistical difficulty of sorting out which beverages could or could not be purchased with food stamps,” among other reasons.

Lost in the political debate over New York City’s proposal: Would the proposal have actually worked? Does banning the use of food stamps to purchase soft drinks actually reduce consumption of soft drinks, thereby lowering obesity rates?

Recent food policy research suggests the proposal would have had a tough time making an impact.

To start, financial barriers to soda do look like they lower consumption but not by a whole lot. This idea is discussed in a 2007 USDA report, “How Do Low Income Households React To Food Prices?” The study looks at what happens in low-income households when you reduce the price of reduced-fat milk or increase the price of soda, by 10 percent each. The results: “a 10-percent reduction in milk price would result in a 14-percent increase in the consumption of reduced-fat milk, and a 10-percent increase in soft drink price would lead to an 8-percent reduction in soft drink consumption.” The same change in financial accessibility was just nearly twice as effective for milk than it was for soda. The authors go on to conclude that “price manipulation may have varying effects on food purchases across different foods,” working better for fruits and vegetables than it would for soda and junk food.

Second, and particularly vexing, any drop in soda consumption among those receiving food stamps would not happen in a bubble. There would be a ripple effect to people who don’t receive food stamps.

A 2007 paper in the journal Food Policy games out, via economic modeling, what this would look like. If food stamps couldn’t be used to purchase soda, demand for soda in that population presumably declines a bit — a good policy outcome. But decreased demand would likely lead to decreased soda prices, thereby encouraging higher soda consumption in the non-food stamps population — a bad policy outcome.

For this, and a few other reasons, the authors conclude, that changes to what food stamps cover would “likely be an ineffective and inefficient instrument for bringing about desired nutritional outcomes.”

To be fair, all of this research is still in a theoretical realm; no states have ever been able to test what would happen in practice. Minnesota applied for a similar food stamps waiver in 2004, to prohibit the use of stamps to purchase soda and junk food, but that was also denied. Mayor Bloomberg’s proposal might have stood a better chance at working than these papers suggest because it was one part of a larger campaign. The city has launched public education initiatives and now bars restaurants from cooking with trans-fat oils. On its own though, the policy doesn’t look like a particularly sure-fire way to tackle a growing obesity rate.