THE OBESITY CRISIS: CHALLENGE TO THE FOOD INDUSTRY

Rising rates of overweight and obesity pose a major challenge to the food industry. The industry has the opportunity to take positive steps to become part of the solution, rather than part of the problem, which is the increasing perception. By 1999-2000 almost two-thirds of American adults were overweight or obese. The percentage of overweight children and adolescents rose by about three fold between 1980 and 2000. Overweight and obesity are now considered a serious health care crisis, with increased risk of many serious diseases. The added health care costs have been estimated at $732 annually for every American. The gain in weight is the result of eating more combined with less physical activity. Three areas are getting particular attention. The increase in portion sizes. The potential legal liability of food companies. And the foods and beverages available at schools, as well as the disappearance of physical education as part of the curriculum. If progress is to be made, people will need to develop healthier eating and exercise habits. The food industry can contribute to both. Some companies, such as Kraft Foods and Subway are emerging with proactive strategies. Community programs which encourage physical activity, such as Colorado on the Move, and now America on the Move, are drawing increasing attention. With a shift in attitudes toward "less can be more" and quality over quantity, food spending might actually increase, which suggests there may be a "silver lining" of opportunity for savvy food companies.Food Consumption/Nutrition/Food Safety, Health Economics and Policy, Marketing,

MAJOR CONSUMER TRENDS AFFECTING THE U.S. FOOD SYSTEM

Consumer/Household Economics,

THE IMPACT OF REDUCED AGRICULTURAL CHEMICAL USE ON FOOD: A REVIEW OF THE LITERATURE FOR THE UNITED STATES

Concerns about food safety and environmental quality have increased in recent years. Consumers are particularly concerned about the health risks posed by pesticide residues in food and the environmental impact of agricultural chemicals. These concerns have stimulated a considerable amount of recent research to assess the effects of reduced agricultural chemical use. This paper focuses on the research in the United States which has examined the impact of reduced agricultural chemical use on food, including food prices, consumer acceptance, food quality, and food demand and consumption. This review is divided into three major sections. The first gives an overview of consumer concerns and behavior, using the results of the annual Food Marketing Institute survey of grocery shoppers. The second summarizes two "macro" studies that simulated the impact of reduces chemical use on agriculture in the United States. The third section reviews a number of "micro" studies that analyzed consumer willingness to pay for reduced pesticide residues on fruits and vegetables. These studies primarily rely on either hedonic price models and existing organic food or contingent valuation techniques and consumer surveys of various alternatives not currently available. This paper concludes with a few thoughts that will hopefully add some perspective to the public policy assessment of this issue.Food Consumption/Nutrition/Food Safety,

THE FOOD CONSUMER IN THE 21ST CENTURY: NEW RESEARCH PERSPECTIVES

A far more complex set of factors are now driving food consumption patterns in high-income countries than economists have traditionally analyzed in demand studies. Food consumers have moved up Maslow's hierarchy of needs pyramid from satisfying basic physiological needs. If the traditional focus was on quantity demands for homogenous commodities, attention needs to increasingly be given to the demand for quality-differentiated food products. Although the income elasticity in terms of quantity may be low, the elasticity for many food attributes, such as nutrition and health, safety, convenience, and diversity, are quite high. Where people buy food, the form in which they buy and where they eat it are all changing. To simply distinguish between food consumed at home and away from home is no longer adequate. Rapid demographic and socioeconomic changes, such as the massive entrance of women into the workforce and increasing multi-ethnicity, are a fundamental driver of food buying and dietary patterns. Research needs to give more attention to the demand for differentiated, frequently branded food products, to disaggregation of the population, and to a recognition that traditional demographic factors may have limited explanatory power. A specific research study is given as an example of each. The single quality-differentiation factor currently receiving the most attention is genetic modification. The difference in the general consumer acceptance of biotechnology and genetically modified foods between the United States and Europe is dramatic. Kevin Lancaster's consumer model can be utilized to more fully understand this difference, especially to distinguish between a difference in the perception of the risks and benefits of the technology and in the underlying consumer preferences for risk avoidance or naturalness in food.Consumer/Household Economics, Food Consumption/Nutrition/Food Safety,

RECENT EVIDENCE CONCERNING HOUSEHOLD BEHAVIOR AND NUTRITION IN DEVELOPING COUNTRIES

This paper reviews some of the recent major research findings concerning the effect of household behavior on food consumption and nutrition. Important extensions to the understanding of household behavior have been made in the areas of the impact of income and price changes, agricultural households, the effects of agricultural commercialization, the new household economics, and particularly the effect of time as a scarce economic resource, the intrahousehold allocation of food, and the determinants of nutritional status. This knowledge is important because the response by households determines the ultimate impact of economic changes and government actions on the nutritional status of the population.Consumer/Household Economics, Food Consumption/Nutrition/Food Safety,

THE IMPACT OF THE VALUE OF WOMEN'S TIME ON FOOD AND NUTRITION IN DEVELOPING COUNTRIES

Food Consumption/Nutrition/Food Safety, Labor and Human Capital,

DETERMINANTS OF THE HEALTH OF AMERICAN PRESCHOOL CHILDREN: ESTIMATED HEALTH DEMAND AND PRODUCTION FUNCTIONS

Health Economics and Policy,

NON-PURCHASING HOUSEHOLDS IN FOOD EXPENDITURE SURVEYS: AN ANALYSIS FOR POTATOES IN SWEDEN

A common problem in food expenditure surveys is that many households report not purchasing some products. Usually the reason for these zero expenditures is unknown. The issue may be treated as a potential sample selection bias problem. This study estimates Engel functions for expenditures for fresh potatoes, processed products, and the value of home-grown potatoes with data from the 1989 Swedish Household Food Expenditure Survey. The two-step Heckman procedure is used. A strong generational pattern is found in potato consumption as well as several other significant effects.Food Consumption/Nutrition/Food Safety,

A SEGMENTATION ANALYSIS OF U.S. GROCERY STORE SHOPPERS

Cluster analysis was used to conduct a segmentation analysis of U.S. supermarket shoppers. This study is based on the responses of a sample of 1,000 shoppers concerning the importance of 21 store characteristics in selecting their primary grocery store for the Food Marketing Institute's 2000 consumer trends survey. Stores must satisfy the attributes important to all consumers in order to be successful. In order of importance, the four top characteristics are a clean/neat store, high quality produce, high quality meats and courteous, friendly employees. The three key supermarket shopper segments identified are time-pressed convenience seekers, sophisticates, and middle Americans. In order to cater to a particular consumer niche, a store must better fulfill the store preferences of that segment. Time-pressed convenience seekers, 36.70 percent of the sample, put a premium on features such as childcare, gas pumps and online shopping. They are likely to be younger, urban with lower or moderate incomes and have the greatest number of children six years old or younger. Quality and services are important to the sophisticates, 28.40 percent of the sample. This group is middle-aged, better educated with higher incomes than average. Middle Americans, 34.90 percent, are attracted by pricing/value factors such as frequent shopper programs, sales and private label brands. They want stores that are active in the community. Demographically they are in the middle with the highest proportion of high school graduates.Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Marketing,

THE DISTRIBUTION OF FULL INCOME VERSUS MONEY INCOME IN THE UNITED STATES

This paper compares the distribution of money income and full income across households in the United States. The concept of full income was introduced in Becker's household model and provides a framework for estimating the economic value of productive non-market activities and leisure. If the allocation of time is voluntary, full income may be a better measure of economic welfare than money income. Non-parametric Lorenz curves and Gini coefficients are used to compare the two distributions. The data are from the Census Bureau's Survey of Income and Program Participation for 1984-86. Full income is more equally distributed than money income. However, the distribution remains very unequal. The income distributions are also compared for specific types of households.Consumer/Household Economics,