A good and balanced diet is central to overall healthy living. However, diet-related diseases have increased in the last decades and became a major public health concern in most developed countries. Consumers’ information and responsiveness are therefore crucial when they purchase goods. On the occasion of the consumers’ rights week, Prof. Rachel Griffith, an ERC Advanced grantee 2009 based at the Institute of Fiscal Studies (UK), explains her research about consumer food purchasing behaviour, firm food pricing behaviour and their impact on nutrition.
Prof. Griffith comments: “Poor nutrition has led to a range of health problems. There has been a rise in the availability and consumption of unhealthy foods. However, it is not all bad news. The food industry has been innovative in some areas, such as reducing the salt intensity of foods, but there are still doubts as to whether the food market is working well to align with consumers’ nutritional needs”. In this context, her research aims at understanding how shoppers actually make their decisions when buying food, what are the key factors determining their choices, and in particular what role firms play in forming consumers' decision. Her team is particularly interested in the impact of tax policies, regulation and information campaigns on consumers’ behaviour.
She says: “There has been a lot of emphasis on prices and the role they play in consumers’ decisions. Prices are pretty much the biggest factor in making purchasing decisions, but prices alone cannot explain consumers’ behaviour. There are many other important factors that intervene when purchasing food such as how much time and effort consumers put in understanding the nutritional properties of a particular food product, how easily accessible that information is and the propensity to self-control”. Talking about self-control, she adds: “Consumers are often tempted by instantaneous pleasures, e.g. sweets, candies or chocolate bars, and they are not necessarily in a position to balance their short-term satisfaction versus their long-term consequences. The way that firms provide information to consumers can exploit this lack of self-control”.
What makes Prof. Griffith’s project truly innovative is that it goes further the existing academic literature by both analysing consumers’ habits across a wide spectrum, considering persons with poor and high quality diet alike, and most importantly that it considers the interactions of firms' and consumer's behaviours. It also takes into account the impact that government intervention has on consumers’ behaviour, with the view of informing policies that could ultimately change the market equilibrium.
Her advisory positions with a number of official UK and international bodies have led Prof. Griffith to engage with a broad user community, including policy-makers, civil society, the media and business. Her research is analysing several policies, including the role that taxation would play in changing consumers’ behaviour. She has looked at the impact that a minimum price on alcohol – a highly debated topic in the UK (see IFS Briefing note) – would have on households’ consumption; she concluded that a reform of the current excise tax on alcohol would be more efficient than other current policy tools. She has examined the role of a tax on saturated fat, a policy that was recently applied in Denmark; her results showed that the impact of such a policy depends crucially on the precise way it is designed. In on-going research she is looking at the ways that such a policy, which focuses on a specific food group, could drive consumers away from one unhealthy product, but lead them to buy another unhealthy product instead. For example, a tax on fats could lead consumers away from crisps, but towards sugary products such as chocolate bars or sodas.
An example of work on the impact of information campaigns is the evaluation of the “five-a-day” campaign, which recommends eating five portions of fruits and vegetables a day. Her work points to the partial success of this campaign, but the ended increases in the prices of fruits and vegetables meant that we have seen little increase in overall consumption levels.
The project team is using rich new data from market research firms in the UK, France and the US. These data include details on the price paid, the products’ characteristics, including their nutritional information (energy, protein, fat, or sugar, the store purchased from etc.). These ‘disaggregated data’ which contain millions of observations on purchases made by around 20.000 households over a ten year period, are proving extremely valuable to the group. It has enabled them to model the market, simulate alternative market situations and to better assess the nutrition patterns across those countries.
Prof. Griffith expects a number of interesting findings from her project, including a better understanding on the way that information helps consumers to make decisions, which will hopefully lead to more appropriate and effective regulation of the food industry. In her words, “The idea is not to put the firms and the government face to face but rather to put the right information in the hands of consumers, while rationalising and strengthening the legal base in which the industry is evolving”.
Talking about her ERC grant, Prof. Griffith comments: “The ERC funding is a very substantial grant, but its attractiveness goes far beyond that; it allows researchers to fully invest in a very complicated problem. Projects like ours, which require long-term commitment, would maybe have been too risky for other research funding agencies to fund.” She also confirmed the prestige attributed to ERC grants and said: “The grant helped me to attract good people to my team; it also helped to relieved me from other administrative duties, so that I can now really focus on the core of my research”.