Symposium: Sugar and FatFrom Genes to Culture

Fat and Sugar: An Economic Analysis1

Adam Drewnowski2
Center for Public Health Nutrition, University of Washington, Seattle, WA 98195
ABSTRACT As incomes rise, the share of income spent on food decreases. To Engels law should be added the
observation that the diet structure changes as well. Incomes and the macronutrient composition of the diet are
linked at the aggregate andmost likelythe individual level. People in higher income nations consume more
added sugars and fats than do people in lower income nations. Lower income consumers within rich nations
consume lower-quality diets than do higher income consumers. The lowering of energy costs ($/MJ) through
technological innovation has been most marked for foods containing added sugars and fat. Although wealthier
persons in poor nations are more likely to be overweight, obesity in the United States is associated with lower
incomes. Obesity in the United States and similar societies may be a socioeconomic, as opposed to a medical,
problem and one that is related to diet structure and diet costs. J. Nutr. 133: 838S 840S, 2003.

incomes

diet structure

sugar

fat

energy costs

obesity

the form of snacks, beverages or fast foods are palatable,

convenient and easy to use. Most important, their energy cost
relative to other foods is low (14). Fats and sweets can be
treated as an example of endogenous preferences in any economic model of consumer behavior.
The notion of endogenous preferences can be difficult to
accommodate within the current economic theory. Much of
traditional economics is based on the premise that rising prices
will lead to decreased demand. The law of demand is behind
current suggestions to augment the price of fats and sweets so
consumers may allocate their resources toward the purchase of
healthier foods (9,10). However, as suggested later, fats and
sweets may prove to be an exception to the rule.

Rates of obesity and overweight in the United States have

risen sharply over the past two decades (1). Because the
genetic pool has remained stable, the explanation must involve altered eating habits or the increasingly sedentary lifestyles (2,3). The sharpest change in diet structure has involved
added sugars and fat (4). Per capita availability of each has
increased by at least 20% since 1977. Nutritionists have
blamed the current obesity epidemic on excessive consumption of fast foods, snacks (5) and soft drinks (6 8) and the
elevated energy density of the U.S. diet. Strategies for obesity
prevention increasingly focus on fiscal and policy measures to
limit the consumption of fats and sweets (9,10).
Obesity in the United States is a public health problem
with many social and economic antecedents. Far from being a
random genetic lottery, the burden of obesity and diabetes
falls disproportionately on minorities and the poor. The economics of food choice may help explain why low income
families have the highest rates of overweight. That explanation is based in part on high palatability and low energy cost
($/MJ) of added sugars and fats.
Fats and sweets are among the most palatable of foods
(11,12). Animal studies show that prolonged consumption of
fats and sweets may permanently affect the metabolic mechanisms of reward (11). Consumer food choices are shaped by
taste, cost and convenience (13) and are predicted by past
food purchases and eating habits. Fats and sweets provided in

Energy costs of sugar and fat

Added sugars and fats provide dietary energy at minimal
cost. Energy cost ($/10 MJ) of sucrose was $0.23/10 MJ in
1999, given that world prices for refined sugar averaged
$0.10/lb. Technological advances in fat chemistry have reduced energy cost of vegetable oils to $0.50/10 MJ or less (14).
The lowering of food prices through technology, mentioned as
a causal factor in the promotion of obesity (15), has been most
effective for foods containing added sugars and fat (16).
Even though the cost of raw ingredients is rarely linked to
retail food prices, energy cost of fats and sweets at the apex of
the Food Guide Pyramid is low (16). Energy cost of potato
chips is in the order of $2.00/10 MJ, and that for soft drinks is
$2.20-$3.70/10 MJ. In contrast, energy cost is $9.50/10 MJ
for fresh carrots and $14.00/10 MJ for frozen orange juice.
This differential in energy costs is compounded by price increases. Retail price increases between 1982 and 1997 were
lower for sugar/sweets (52%) and fats and oils (47%) than for
vegetables and fruit (93%) (16). Not surprisingly, given the
hierarchy of food prices, annual per capita consumption of
sugar and fat remains near record-high levels (4). Added sugars

1
Presented as part of the symposium, Sugar and FatFrom Genes to
Culture, given at the Experimental Biology 02 meeting in New Orleans, LA, April
23, 2002. This symposium was sponsored by the American Society for Nutritional
Sciences and was supported in part by educational grants from ILSI North
America and ILSI Research Foundation. Guest editors for this symposium publication were Adam Drewnowski, Center for Public Health Nutrition, University of
Washington, Seattle, WA, and Allen Levine, Minnesota Obesity Center, Minneapolis VA Medical Center, Minneapolis, MN.
2
To whom correspondence should be addressed.
E-mail: adamdrew@u.washington.edu.

0022-3166/03 $3.00 2003 American Society for Nutritional Sciences.

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KEY WORDS:

FAT AND SUGAR: AN ECONOMIC ANALYSIS

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and fats now account for 50% of energy in the typical

American diet (4).
Engels law and diet structure

3
Abbreviations used: ERS, Economic Research Service; GDP, gross domestic product; USDA, U.S. Department of Agriculture.

FIGURE 1 Spending on foods at home (as percent of consumption expenditures) in relation to the per capita gross domestic product
(GDP) (1993). Data based on Meade and Rosen (17).

FIGURE 2 Energy costs (U.S. $/1,000 kcal) and estimated per

capita energy intakes for high income nations. Data based on Meade
and Rosen (17).

Incomes and diets in the United States

Within the United States, rising incomes have been associated with a lower share of food spending at home (16). Total
percentage share has fallen by more than half since 1950, with
spending on at-home foods affected more than spending on
other goods. Based on ERS/USDA time trends, Americans
spent only 7.4% of disposable income on at-home food in 1998
and an additional 4.2% on away-from-home foods (16) (Fig.
3). Foods consumed away-from-home are typically higher in
fat, sugar and salt than foods prepared and consumed at home.
Consistent with Engels law, poor U.S. households devoted
a far greater share of their disposable income to food compared
with rich households (19 21). Households in the top quintile
by income (mean income, $77,311) spent $1,997 per person
for food in 1992 compared with $1,249 spent by those in the
bottom quintile (mean income, $6,669). USDA studies
showed that low income families purchased lower cost items
and spent their limited resources on fats, sweets and alcohol
(19). Food stamp recipients consumed more added sugars,
meats and fats than they would in the absence of the program,
whereas their consumption of fruits, vegetables, grains and
dairy products remained about the same (19). In other words,
the provision of additional resources failed to shift consumption toward healthier foods.
Consumers spending the highest proportion of disposable
income on food (i.e., low income consumers) may also derive
most dietary energy from sugar and fat. For low income families, obtaining sufficient dietary energy at low cost is the

FIGURE 3 Share of income spent on food by U.S. families and

individuals for 1929 1998. Data from ERS/USDA.

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Wealth and poverty have profound effects on diet structure,

nutrition and health. A law of economics formulated by Engel
in 1857 holds that the proportion of income spent on food
diminishes as incomes increase. Engels law applies to aggregate as well as to individual data. The percentage of personal
consumption expenditures spent on at-home foods diminished
as per capita gross domestic product (GDP)3 rose (Fig. 1). U.S.
residents spent the lowest amount (8%) of disposable income on at-home food, followed by Canada and the United
Kingdom (17). Among the high income nations, low energy
costs were associated with higher energy intakes (Fig. 2).
Economic Research Service (ERS)/U.S. Department of Agriculture (USDA) analyses of estimated energy intakes and
energy costs ($/10 MJ) for high-income nations (GDP
$10,000) show that energy costs were substantially lower for
the United States and the United Kingdom ($2.40/10 MJ)
than for Japan ($9.40/10 MJ) (17).
Nations spending the lowest proportion of the GNP on
food (i.e., high income nations) derive the most dietary energy
from added sugars and fat. As incomes rise and populations
become more urban, countries go through predictable stages of
the nutrition transition (18). Traditional grain-based diets are
replaced by diets containing more animal produce and added
sugars and fats. Analyses of FAO food balance sheets for 85
countries in 1962 first showed this relationship between incomes and changing diet structure (18). Subsequent analyses
of food balance sheets for 133 countries confirmed that the
diets of wealthier countries in 1990 were higher in both sugar
and fat (18). However, the relationship between incomes and
fat consumption has begun to unravel. Since 1962, global
availability of inexpensive vegetable oils has led to greatly
increased fat intakes among low income nations. The shift to
a higher fat diet now occurs at lower GNP levels than previously and appears to be accelerated by high urbanization rates
(18). Similarly, sugar consumption has risen substantially even
among the poorest nations.

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SUPPLEMENT

overwhelming concern. Food Stamp Program (FSP) participants

reported that food price was the most important consideration in
making food choices and that the most important factor in
choosing and preparing foods was to ensure that no-one would
complain they are still hungry (22). Diets of low income consumers for whom food price is the most important consideration
may be high in sugars and fat, simply because these are the
cheapest sources of dietary energy available.
Poverty and obesity

Obesity: an economic hypothesis

Studies on obesity and food choices have stressed the
role of physiological and metabolic variables in the consumption of sugar and fat (28). Environmental studies have
addressed the availability and accessibility of fast foods,
snacks and soft drinks, food advertising and food marketing
(2,59). The present economic hypothesis suggests that the
low energy cost of refined grains, added sugars and fats may
be another key variable. Fats and sweets are the lowest cost
dietary option available. Replacing them with more prudent food choices is likely to be associated with higher diet
costs for the consumer (27).
Americans have become more obese as the percentage of
fat in the diet declined (28). An analogous point can be made
with regard to diet costs. Americans are becoming more obese
while spending a lower share of disposable income on food
(Fig. 4). The amount of sugar and fat in the typical diet
continues to rise. As primary prevention strategies related to
nutrition, obesity and diabetes are put in place, lower socio-

FIGURE 4 Changes in food expenditures (as percentage of income) and the percentage of population that is obese, 19711991.

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Food insufficiency, defined as sometimes or often not

having enough to eat (23), has been associated with higher
rates of overweight (24,25). The USDA put forward a behavioral model by which household members faced with diminishing resources first consumed less expensive foods to maintain energy intakes at lower cost (26). Only when incomes
diminished even further was the amount of energy ration
reduced to less than that needed. A proposed energy-density
model links dietary energy density with food expenditures. A
reduction in food expenditures is likely to be associated with
higher energy-density diets and with increased consumption of
starches, added sugars and fat. Recent studies based on a linear
programming model suggest that imposing a constraint on diet
costs forces dietary choices in the direction of more cereals,
sugars and fat (27). Perceived food insecurity may drive consumers toward low cost, energy-dense foods.

economic groups continue to lag behind (29). There is support

for the argument that obesity in the United States is not
primarily a medical problem and cannot be controlled by
primarily medical approaches (30).