Simulating price subsidies on healthy foods in Mexico

To simulate the impact of a price subsidy (price reduction) on purchases of healthy foods with suboptimal consumption.

We used data from the 2018 Mexican National Household Income and Expenditure Survey, a cross-sectional study. We estimated own- and cross-price elasticities of the demand for food groups using a Linear Approximation of an Almost Ideal Demand System. Using the estimated elasticities, we derived changes in purchases associated with a 10, 20 and 30 % price reduction in healthy food groups with suboptimal consumption. We also estimated price reductions for these food groups that would meet the recommendations of the Healthy Reference Diet (EAT-HRD) proposed by the EAT-Lancet commission.

Mexico (country).

A nationally representative sample of mexican households.

Price reductions were associated with increases in the quantity purchased, ranging from 9·4 to 28·3 % for vegetables, 7·9 to 23·8 % for fruits, 0·8 to 2·5 % for legumes and 6·0 to 18·0 % for fish. Higher reductions in prices would be needed to achieve the EAT-Lancet Commission's recommendations for food groups with suboptimal consumption in Mexico: a 39·7 % reduction in prices for fruits, 20·0 % for vegetables and 118·7 % for legumes.

Our study shows that reductions in prices can lead to increases in purchases of healthier food options. More research is needed to assess the most cost-effective strategy to deliver subsidies using either conditional cash transfers, vouchers or food baskets provided to families or direct subsidies to producers.