Can Price Intervention Policies Improve Diet Quality in Spain?

In this paper we estimate consumer demand for food taking into account some socio-demographic characteristics of consumers. To tackle the issue of unobserved heterogeneity among consumers we used the, recent developed, Exact Affine Stone Index (EASI) demand system. Data used come from matching two datasets: the National Expenditure and the National Health Surveys for Spain. The main objective of our paper is to examine the effect of different price intervention policies that aim to improve diet quality. These policies include taxing unhealthy foods (e.g. sweets; fat), subsidizing healthy foods (e.g. Fruit and vegetable) and a mixture policy that include taxing unhealthy and subsidizing healthy foods at the same time. Our results consistent with the literature suggesting that taxes (subsidies) have a significant but small effect on diet quality. However, taxes can increase public budget significantly which can be used to finance other policies as educational campaigns or complementary health policies