Public policy in food markets: understanding advertising and choice inter-dependencies

• Applicant: Dr. Helena Perrone
• Subject Area: Economic Policy, Applied Economics
• Term: since 2020
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 440952103

1. To make substantial contributions to the literature on how past choices and exposure to advertising affect people's food and drink purchasing behavior, how these dependencies influence firms' pricing and advertising strategies, and how this influences the design of public policy to improve diet.Understanding what policies are effective at improving diets is a key challenge facing policymakers. To do this, it is necessary to know how policy affects the decisions people make over what food and drinks to consume and those that firms make over pricing and advertising. A central determinant of these decisions is how past choices and experiences affect current ones. We will study two specific applications: how advertising affects people's food and drink choices, and how firms choose how to advertise, and how choices made for 'out-of-home' consumption interact with those made for 'athome' consumption.We will make three advances on the existing literature. First, we will build on frontier econometric techniques developed in the industrial organization literature to model consumer choice and strategic firm interaction, and apply the framework to study the effectiveness of public policy aimed at tackling poor diet. Second, we will exploit panel data on people's food and drink purchasing behavior and advertising exposure to make progress on understanding the effect of policy in different contexts. To date, little work has studied food purchases for outofhome consumption, and even less has looked at the relationship between this and at-home consumption. Third, we will use these new methods and data to conduct counterfactual analysis of policies being considered. We will consider not only how firms may change prices in response to government intervention, but also how they might alter advertising.2. To inform policymakers of the implications of our findings for the design of public policy aimed at tackling obesity and diet related disease. The framework that we develop will enable us to provide timely cutting-edge evidence on the effects of policies aimed at improving nutrition.We will provide evidence on policies that restrict advertising of unhealthy foods and the availability of fast foods, both of which are under active consideration by governments (e.g., the UK). As part of the Department of Health's Obesity Policy Research Unit, the research team at the IFS has developed relationships with key policymakers, increasing the opportunity for our research to have substantial policy impact. We will draw on this experience to strengthen links with policymakers in France and Germany.3. To strengthen international cooperation between the teams in the UK, France and Germany. The complementary strengths of researchers in the three countries offer the means to achieve the substantial academic contributions set out here, to cement the relationships and promote long lasting future collaboration, and to develop early career researchers in each Institution.

• DFG Programme: Research Grants
• International Connection: France, United Kingdom
• Cooperation Partners: Dr. Martin O' Connell; Professor Dr. Pierre Dubois