Agriculture, Food, and Health: Changes in Industry Structure and Consumer Behavior

Since the 1970s, almost every sector along the agrifood supply chain, such as production, processing, distribution, and retailing, has been characterized by increasing concentration, and this has raised concerns over the welfare of small farms and final consumers. For consumers, the significant external costs associated with unhealthy food consumption have also raised concerns about how to make people, especially those in low-income households, eat healthier. This dissertation explores two key issues in the U.S. agrifood sector: the changing market structure and the impact of public policies on consumers’ healthy eating behavior. The first essay develops a model of firm behavior to generate testable predictions of how concentration in upstream agricultural production affects industrial concentration in the downstream food manufacturing sector. It then uses three independent identification strategies to quantify the causal effect of agricultural production concentration, using commuting zone-level data from the 1982 to 2012 Censuses of Agriculture. The first strategy uses weather-induced variation of agricultural concentration, the second strategy uses the variation of agricultural concentration caused by government payment programs, and the last strategy exploits a policy change that made oilseed eligible for government payments. I find that a more concentrated agricultural production sector leads to a significantly more concentrated food manufacturing sector: at the sample means, a 2.5% increase of the HHI of agricultural production leads to a 0.7% increase of the HHI of food manufacturing. The second essay (coauthored with Zhenshan Chen) investigates the impact of the Supplemental Nutrition Assistance Program (SNAP) on low-income households’ diet quality. Based on data from the National Household Food Acquisition and Purchase Survey (FoodAPS), we find that SNAP does not affect diet quality. The mechanisms through which the Supplemental Nutrition Assistance Program (SNAP) affects diet quality are poorly understood. We develop a theoretical model that generates two effects of SNAP on diet quality: 1) a mental accounting effect, when households use SNAP benefits differently from cash income, and 2) a households healthy eating awareness effect throughout the SNAP benefit cycle. We find no evidence for the mental accounting effect that induces participants to treat SNAP benefits as healthy food money. However, the analysis validates a diet quality cycle in the sense that participants’ healthy eating awareness declines throughout the SNAP benefit month. The third essay (coauthored with Rigoberto Lopez and Rebecca Boehm) investigates the impact of Medicaid expansion under the Affordable Care Act (ACA) on beverage choices by low-income households. We utilize household-level data on beverage purchases from 2013 to 2016 in 52 U.S. metropolitan areas in Medicaid expansion and non-expansion states. Results from a triple-differences model, with nearly one million observations on purchases of seven beverage categories, indicate that Medicaid expansion resulted in eligible households buying more soda and fruit drinks and less bottled water. Results from a mixed-logit model, with nearly 17 million purchase observations at the household-brand level, indicate that Medicaid expansion led to overall increases in eligible households’ purchases of and valuation of sugary beverages and a decrease in their price elasticities of demand. The unintended impacts found in these empirical results highlight the need to complement the benefits of Medicaid expansion with effective diet quality programs or to investigate nudges to improve the healthfulness of low-income household beverage choices