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Abstract
Obesity is a complex problem with many causes, from genetic and behavioral disorders
to environmental factors, including access to calorie-dense fast food meals. Economists and
epidemiologists disagree on the importance of access to fast food as a causal factor for obesity,
but agree that any policy regulating access to fast food will likely use the price system, through
taxes or other means to raise the relative cost of buying fast food. Yet, little is known of
the structure of demand for food-away-from-home (FAFH). This study provides estimates of
the price-elasticity of demand for four di¤erent types of FAFH using a novel new dataset from
NPD, Inc. By including physiological measures of obesity, physical activity and health status as
additional regressors in an instrumental variables framework, we control for important sources
of observed heterogeneity. We
nd that all types of FAFH are price elastic in demand, but
ne
dining is highly elastic while fast food is nearly unit elastic. Food-at-home (FAH), on the other
hand, is relatively elastic. Critically, cross-price elasticities of demand show little willingness to
substitute between FAH and any type of FAFH. When prices are rising, consumers prefer to
change the type of restaurant they visit, rather than forego the experience entirely. As shown
elsewhere in the literature, therefore, taxing fast food is likely to be counterproductive.