Title: Price and Label Changes and Purchasing Behavior in a Hospital Cafeteria

Author: Kim Nichols Dauner, PhD, MPH, Department of Health, Physical Education and Recreation, University of Minnesota Duluth, kdauner@d.umn.edu

Section/SPIG: Food and Nutrition

Issue Date:

The adoption of healthy food policies and practices in health care settings has the potential to promote health and reduce obesity and chronic disease among consumers both within and outside the health care facility. There is growing evidence for how pricing strategies have led to increased healthy food purchases (1-3).

A recent literature review found higher price elasticities for foods purchased away from home, suggesting greater changes in purchasing behaviors as a result of price changes (4). In many cases food items that are unhealthy are cheaper than those with more nutritional value.  However, the price of unhealthy food does not reflect the true cost of consumption (e.g., costs related to obesity and chronic conditions). As a result, it may be efficient to tax unhealthy food and subsidize healthy food purchasing to encourage consumption that may reduce obesity and improve health. Moreover, changes in institutions may have spillover effects that lead to changes in regional food systems and agricultural policy.

Our purpose was to investigate whether food selection behavior among hospital employees changes as a result of changes in 1) food prices and 2) labeling food at the point of purchase as organic, local, and/or healthy.

bison burger nutrition label

 

At St. Luke’s Hospital, a 267-bed regional trauma center located in Duluth, Minn., hospital employees make up approximately 80 percent of the cafeteria consumers and spend approximately $90,000/month in the hospital cafeteria.  The study design consisted of six, three-week study periods:

  1. Baseline
  2. Price increase (20 percent tax) on a specific unhealthy, non-organic or non-local food
  3. Price decrease (20 percent subsidy) for a corresponding healthy, organic, or local food
  4. Simultaneous tax and subsidy
  5. Tax and subsity with labels, and
  6. Return to baseline

The labels included nutrition information, maps of where food was produced, organic/non-organic labels, and educational messages at the point of purchase

Aggregate sales data for each period was evaluated. To control for changes in daily sales the quantity of each item sold was measured as a percentage of total quantity of items sold in the cafeteria in each three-week period. A 20 percent price reduction of a local, healthy food item (bison burger) increased the percentage sold by 26 percent from the baseline period. A 20 percent increase in the price of a close substitute, though non-local and less healthy food (hamburger) along with the prior price reduction, resulted in a 74 percent increase in sales of the local, healthier bison burger. Adding labels and educational messages to these price changes resulted in a 160 percent increase in the local, healthier food item sold.  The price and label elasticity was -7.97, suggesting that consumers were verDon Solwold on his Quarter Master Buffalo Ranch in Esko, MN. Don’s ranch supplies the buffalo meat for the bison burgers served in St. Luke’s cafeteria.y responsive to price changes with labeling.

After the price manipulation for the purely organic item (a pre-packaged yogurt) (20 percent price drop for the organic brand, 20 percent price increase for non-organic brand), the quantity of the organic brand increased by 32 percent while the quantity of the non-organic item fell by 6 percent compared to baseline sales. When we added the organic label message along with the price changes, there was a 36 percent increase in the organic item sold and a 7 percent decrease in the non-organic item. This translates into a price and label elasticity for the organic item of -1.82, again suggesting that consumers were sensitive to the price and label changes.

 

Overall, there appears to be substantial price sensitivity for organic, local and healthier food items with stronger quantity changes when food labels and messages were added to the price manipulations. This suggests that food labeling at the point of purchase should be used along with taxes and subsidies on food items. The next step of this research is to analyze daily sales and food selection by individual employees (controlling for relevant covariates) to determine sensitivities to price and label interventions. The Healthy Food, Healthy Lives Institute at the University of Minnesota supported this research.

 

(1) Jeffery RW, French SA, Raether C, & Baxter JE (1994). An environmental intervention to increase fruit and salad purchases in a cafeteria. Preventive Medicine, 23, 788-792.

 

(2) French SA, et al. (1997). Pricing strategy to promote fruit and vegetable purchase in high school cafeterias. Journal of the American Dietetic Association, 97, 1008-1010.

 

(3) French SA, et al. (2001). Pricing and promotion effects on low-fat vending snack purchases: The CHIPS Study. American Journal of Public Health, 91, 112-117.

 

(4) Andreyeva T, Long MW, Brownell KD (2010). The impact of food prices on consumption: A systematic review of research on the price elasticity of demand for food. American Journal of Public Health, 100, 216-222.