Do Lower Food Costs Lead to Higher Health Costs?

I came across some data recently on food expenditure as a share of total expenditures in various countries and thought they were interesting. The percentage spent by Americans didn’t surprise me, but the percentages spent by everyone else did. I find it amazing that the Japanese spend more than twice as much on food as we do.

I couldn’t find any discussion of why these figures vary so widely. Trade and tax policies undoubtedly explain some of it. But most of the difference is probably explained by incomes—the higher a nation’s income, the less its people spend on food.

Out of curiosity, I looked up data for health spending. I could only find data for the OECD countries, but it shows the inverse relationship—the higher a nation’s income, the more it spends on health. I expect that the same would apply to housing as well.

If you add food and health costs together, the U.S. is a bit less of an outlier than it appears looking at either food outlays or health expenditures separately. The numbers are not really additive, but adding them together anyway shows remarkable similarity among the high-income countries; all spend between 20 percent and 22 percent on food and health combined, with Germany being a bit of an outlier on the high side and the U.K. being an outlier on the low side.

Food and housing are obviously the two most important things to people with health being third. So it stands to reason that if they spend less on food or housing they are going to spend more on health. This being the case, any effort to reign in health costs may be futile unless we make food and housing more expensive, which would serve no purpose.

Source: U.S. Department of Agriculture, Economic Research Service

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