Two years ago, The Atlantic wrote an analysis piece called “Cheap Eats: How America Spends Money on Food”. The article discusses the long-term trends of falling food prices relative to incomes, the increase in food purchased away from home, and how these compare across income classes. Another article by The Atlantic titled “The Myth That Links Poor Families to Fast Food” discusses the misconception that poor families are more prone to unhealthy eating. These articles highlight both cultural and national problems that the United States faces, centered on food availability, affordability, and public health. I decided I would take a closer look at the data and see if I reach the same conclusions, as well as analyze the potential impact of food
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This trend has been shown all over the world that relative prices of food have fallen as incomes rise. While SCF data has only been measured every three years since 2004, not far enough to decipher this long-term trend, I found the average American household spends about 16% of their income on food. There is no noticeable trend in the data since 2004 but I did find large differences in percentage of income spent on food based on income level. Notes: This data comes from the SCF and sorts population based on income percentile. The first four bars represent the four lowest quintiles while the top 20% is divided in half. Average food expenidtures is divided by the average normal income of household in the listed income percentiles.
These significant differences can be explained by food being a necessity good, which is a type of normal good (meaning demand increases with income) that has a lower change in demand as incomes rise or fall. This means that those with greater incomes do in fact purchase more food, but less as a proportion of total income. A stomach’s marginal utility of food decreases for every amount eaten after all. This data is important because as described in “Cheap Eats”, the relative cost of food has been falling for everyone with the exception of the …show more content…
Particularly we see that lower incomes families spend a smaller portion of food expenditures away from home than upper income families. This appears contradicts the stigma that poor families are more likely to dine out, particularly at fast food chains, which “The Myth That Links Poor Families to Fast Food” discusses. According to the article, the lowest income families are the least likely to eat fast food weekly and the data from SCF seems to support that conclusion. It is true that poor American’s are more likely to be obese but this does not seem to be related to fast food chains. My conclusion of this data is that we are seeing a substitution effect that as the relative price of food is falling, people are willing to spend larger amounts of money to dine out. This also explains why the poorest do not dine out as frequently because the relative cost of food remains
This trend has been shown all over the world that relative prices of food have fallen as incomes rise. While SCF data has only been measured every three years since 2004, not far enough to decipher this long-term trend, I found the average American household spends about 16% of their income on food. There is no noticeable trend in the data since 2004 but I did find large differences in percentage of income spent on food based on income level. Notes: This data comes from the SCF and sorts population based on income percentile. The first four bars represent the four lowest quintiles while the top 20% is divided in half. Average food expenidtures is divided by the average normal income of household in the listed income percentiles.
These significant differences can be explained by food being a necessity good, which is a type of normal good (meaning demand increases with income) that has a lower change in demand as incomes rise or fall. This means that those with greater incomes do in fact purchase more food, but less as a proportion of total income. A stomach’s marginal utility of food decreases for every amount eaten after all. This data is important because as described in “Cheap Eats”, the relative cost of food has been falling for everyone with the exception of the …show more content…
Particularly we see that lower incomes families spend a smaller portion of food expenditures away from home than upper income families. This appears contradicts the stigma that poor families are more likely to dine out, particularly at fast food chains, which “The Myth That Links Poor Families to Fast Food” discusses. According to the article, the lowest income families are the least likely to eat fast food weekly and the data from SCF seems to support that conclusion. It is true that poor American’s are more likely to be obese but this does not seem to be related to fast food chains. My conclusion of this data is that we are seeing a substitution effect that as the relative price of food is falling, people are willing to spend larger amounts of money to dine out. This also explains why the poorest do not dine out as frequently because the relative cost of food remains