Researchers used the virtual supermarket to test consumers’ responses to different kinds of food taxes and subsidies. Results published in prestigious journal The Lancet Public Health confirmed that taxes targeting individual food types reduce the amount of that food bought, but also result in substitution effects.

This suggests, the researchers reason, that combining several taxes into a broader suite – dubbed a ‘junk food tax’ – could lead to a greater improvement in the overall healthiness of all food purchased.

“We know that public health campaigns targeting individuals, for example educating people about healthy eating, aren’t enough to curb the obesity epidemic. Instead, we should be making the healthy choice the easy choice,” said researcher Professor Cliona Ni Mhurchu, from the University of Auckland’s Faculty of Medical and Health Sciences. “There is mounting evidence that one of the best ways to do this is by making healthy foods more affordable, and unhealthy foods less affordable.”

Mexico and Hungary have introduced junk food taxes, and a growing number of other jurisdictions, including France, Mexico, the UK and Ireland, Saudi Arabia, Portugal and multiple US cities have adopted soft drink taxes. After the Mexican sweetened beverage tax was introduced, purchases of taxed drinks fell by 5.5 percent in 2014 and 9.7 percent in 2015.

“But no price policies have been introduced in New Zealand to date,” said Professor Ni Mhurchu.

The new study was a randomised controlled trial – the gold standard in science – and, unlike most other research in this area, examined ‘substitution effects’. This is where shoppers substitute another product for a taxed product, for example, juice for fizzy drink.

“We wanted to see how taxes and subsidies affected the whole shopping basket, not just the targeted food,” says lead author Dr Wilma Waterlander, who conducted the study as part of her post-doctorate at the University of Auckland, and now works at the University of Amsterdam.

Our results point to beneficial health effects from food taxes and subsidies. But we also find evidence of substitution effects, suggesting a broad, combined ‘junk food tax’ might be the best at increasing the healthiness of the total shopping basket.

Professor Cliona Ni MhurchuSchool of Population Health, Faculty of Medical and Health Sciences

The study’s 1038 participants were able to virtually ‘walk around’ and select items from the shelves of a 3D computer simulation based on images from a real New Zealand supermarket. They each completed up to five shops - 4258 in all. Food prices across the board were randomly varied from shop to shop, so researchers could gather as much information as possible about how people respond to price fluctuations.

On top of these random tweaks, researchers added bigger price changes to simulate five different policies: a fruit and vegetable subsidy (20 percent), sweetened beverage tax (20 percent or 40 percent), saturated fat tax ($2 or $4 per 100g saturated fat), a salt tax (2c or 4c per 100mg sodium), sugar tax (40c or 80c per 100g sugar). A control condition had no tax or subsidy.

“It is almost impossible to set up a study like this in the real world – for example, you would need to introduce food taxes in some parts of New Zealand and not others,” Dr Waterlander said. “Our virtual supermarket allowed us to test food taxes and subsidies in a highly controlled, but realistic environment.”

Using established criteria, researchers classified each food item as ‘healthy’ or ‘unhealthy’, and then analysed the healthiness of the shopping baskets.

With no taxes or subsidies, two-thirds (68 percent) of food purchases were classified as healthy. Taxes on food high in saturated fat, sugar and salt led to shoppers buying markedly less of the taxed nutrients (132g less saturated fat, 119g or about 28 teaspoons of sugar, and 11g salt respectively). These three taxes also improved the healthiness of the overall shopping basket by 1.8 percent, 1.1 percent and 1.3 percent respectively.

“While these changes may sound modest, seemingly modest shifts can sum up to big health impacts across the whole population and over the long-run,” says Professor Ni Mhurchu.

The sweetened beverage taxes did not significantly improve overall healthiness, possibly because sugary drinks make up only a small fraction of people’s diet. But the most comprehensive version tested, which included sweetened beverages, energy drinks and fruit juices, resulted in shoppers buying 170ml per week less of those drinks.

Researchers also identified some intriguing substitution effects. Both saturated fat and salt taxes resulted in people buying more fruit and vegetables (as a percentage by weight of all food purchases) and more sugar as a percentage of total energy. People bought more fruit and vegetable when produce was subsidised (a third of a kilogram per week), however the healthiness of their overall baskets was unchanged.

Professor Cliona Ni Mhurchu

“Our results point to beneficial health effects from food taxes and subsidies. But we also find evidence of substitution effects, suggesting a broad, combined ‘junk food tax’ might be the best at increasing the healthiness of the total shopping basket, rather than narrowly focused individual food taxes,” said Professor Ni Mhurchu.

“It also highlights the need to carefully study substitution effects, because these could undermine the effects of pricing policies, for example if saturated fat is replaced with sugar or vice versa. In view of these findings, we recommend policy makers seriously consider options for a combined junk food tax, perhaps accompanied by a fruit and vegetable subsidy, and how it stacks up against other dietary interventions."

The researchers point out that the way food manufacturers reformulate products in response to food taxes would likely enhance health gains. “Combinations of tax and subsidy options, accompanied by codes of practice with and regulation of the food industry (eg, to set maximum levels of hazardous nutrients, to improve nutrition labelling, and to constrain marketing) might yield the best improvements in population diets and mitigate potential unintended consequences,” they write.

The study’s authors include fellow public health heavy-hitters, Professor Tony Blakely from the Universities of Otago and Melbourne (senior author) and Professor Boyd Swinburn from the University of Auckland. The research was funded as part of a Health Research Council of New Zealand programme grant.

Taxes and subsidies are no silver bullet, Dr Waterlander said. “Ideally, we’d change the entire food system, so that we grow, produce, process and market food in a healthier and more sustainable way. Right now, more than 70 percent of packaged foods in New Zealand supermarkets is unhealthy, and often this food is very cheap. But food taxes and subsidies offer a potentially powerful lever to improve population diets, and that warrants serious consideration.”