A Sequel: The Invisible Tax on Eating Well
If Obesity Is a Market Outcome, How Do We Change It?
This midweek sequel to Obesity Is a Market Outcome grows out of reader responses, especially the recurring question of whether taxes are the right first step.
Obesity Is a Market Outcome argued that America’s obesity crisis is not mainly a failure of willpower. It is a market outcome: the predictable result of a food economy that has made calories cheap, convenient, and abundant while making nutritious food comparatively expensive.
That argument leads to a harder question: if obesity is produced by the market, what would it take to produce a different result?
The usual answer is to punish the current system. Tax junk food. Eliminate subsidies for commodity crops. Make ultra-processed food more expensive and assume healthier eating will follow.
But that gets the sequence wrong.
If the cheapest food in America becomes more expensive before nutritious food becomes more affordable, the burden falls first on the people with the fewest choices. You do not solve the problem by making constrained families pay more for dinner. You solve it by removing what amounts to an invisible tax on eating well.
That tax is not collected by the IRS. It is built into the structure of the food economy itself—in the price of fresh produce, the labor intensity of specialty crops, weak cold-chain infrastructure, spoilage, perishability, and a system that has spent decades optimizing cheap calories rather than affordable nutrition.
The next step is not to shame consumers or declare war on the foods they rely on. It is to rewire the market so the healthy choice is no longer the expensive one.
Why punishment alone backfires
Millions of households rely on ultra-processed food for a simple reason: it is the cheapest way to buy energy. It is household economics.
For families under pressure, the relevant comparison is often not healthy versus unhealthy. It is calories per dollar. Ultra-processed foods win that contest decisively, by 3 to 1.
So what happens if policymakers raise the price of those foods without changing the economics of the alternatives?
Low-income households are hit first and hardest. They already spend a larger share of income on food. If the price of ultra-processed staples rises, many families will simply pay more for the same diet, because the substitutes—fresh vegetables, fruit, and minimally processed proteins—still cost more, spoil faster, and often require more time to buy, prepare, and store.
Even if demand shifted quickly, supply could not. Fresh food is not produced like cereal or soda. A factory can add a shift. A farm cannot add a growing season. Push millions of households toward produce tomorrow, and prices in the produce aisle will rise before supply can catch up.
That is why a stand-alone tax on less nutritious foods is mostly a regressive tax. And an abrupt withdrawal of commodity support, without a transition strategy, would raise grocery bills before healthier alternatives were within reach.
The first principle of reform should be simple: do not punish consumers for responding rationally to the system that exists.
Where the hidden tax comes from
The invisible tax on eating well is built into the economics of fresh food.
Processed foods benefit from industrial scale. They are made from cheap commodity inputs, engineered for shelf life, and produced in systems that have enjoyed decades of automation and productivity gains. Over time, those forces have driven the cost of calories down.
Fresh food works differently. It is perishable. It bruises. It spoils. It requires refrigeration, careful handling, and rapid movement. Many specialty crops still depend heavily on hand labor because they are difficult to harvest mechanically without damage. As wages rise, the cost of those foods rises with them.
That is one reason the gap between cheap calories and nutritious food has become so wide. The modern food economy has become extraordinarily good at producing shelf-stable energy. It has invested far less in making freshness abundant and affordable.
In effect, healthy food carries a structural surcharge. Consumers pay for labor intensity, cold storage, spoilage risk, and supply-chain fragility every time they move from the snack aisle to the produce section.
That is the tax.
The supply-side challenge
If the goal is to narrow the gap between cheap calories and healthy food, the answer cannot lie only on the demand side. It must also lie on the production side.
The long-term opportunity is to make specialty crops more productive. Agricultural robotics and mechanization may sound like niche farm technology, but they are also public-health strategy. The United States has invested enormously in the efficiency of commodity agriculture and food processing. It has invested much less in lowering the cost of harvesting strawberries, apples, lettuce, leafy greens, and other foods people are told to eat more of.
That imbalance matters. As long as fresh food remains highly labor-intensive, it will remain structurally expensive. If productivity in specialty crops does not improve, eating well will continue to cost more than eating poorly.
But innovation does not spread simply because an inefficiency exists. In specialty crops, margins are thin, biological risk is high, and failed investments are expensive. Growers and distributors adopt new harvesting systems, cooling, and post-harvest handling only when the economics make adoption possible.
That means demand certainty: multi-year purchasing agreements, reliable regional buyers, and volumes large enough to justify new equipment and logistics capacity. It also means financing that lowers the cost and risk of trying new technology—leasing, loan guarantees, targeted specialty-crop support, and business models that turn large upfront costs into manageable operating expense.
That is why robots-as-a-service matters. It lowers the threshold for experimentation and lets productivity gains spread without requiring every producer to become a venture capitalist.
Fresh-food innovation will not scale because the need is obvious. It will scale when the economics of adoption become irresistible.
The cold chain is health policy
The second hidden cost lies in distribution.
Ultra-processed foods can sit in warehouses and travel long distances with minimal loss. Fresh foods cannot. They require an uninterrupted cold chain and much more precise handling. When that system breaks down, losses show up as spoilage, shrink, and rejection—and those losses are built into the prices consumers pay.
Food waste is not just an environmental problem. It is part of why produce is expensive.
Every carton of berries lost in transit, every load rejected because of temperature problems, every pallet of greens that deteriorates on the shelf adds to the cost of the produce that survives. Weak logistics, in other words, function like a hidden tax on nutrition.
Lower costs will not emerge from wishful thinking. They depend on infrastructure and standards that reduce risk across the system: pre-cooling hubs, refrigerated aggregation points, better routing, real-time temperature monitoring, improved packaging, and post-harvest preservation. Common standards for traceability and temperature integrity can reduce disputes, lower risk, and make savings easier to capture.
A serious food strategy would treat cold storage, transportation, packaging, shelf life, and spoilage control as public-health issues, because they help determine whether nutritious food is affordable, available, and worth buying.
Build a bridge, not just a penalty
None of these supply-side changes will happen overnight. Reform needs a bridge.
Selective health levies can play a role, especially where the target is relatively clear, as with sugar-sweetened beverages. But taxes alone are a blunt instrument, and a broad tax on “processed food” would invite endless fights over definitions and unintended consequences.
The better principle is simpler: do not rely on penalties alone. Use public policy to narrow the price gap between cheap calories and nutritious food.
That can mean targeted nutrition incentives, fruit-and-vegetable subsidies for low-income households, fruit-and-vegetable benefits prescribed through healthcare providers, and procurement policies that create stable demand for healthier food. It can also mean using revenue from carefully designed health levies to support some of those efforts.
The goal is not to build a perfect tax-and-subsidy machine. It is to move prices, incentives, and investment in the right direction without imposing new burdens on families already under strain.
When food assistance stretches further for produce than for junk food, behavior changes because the economics of the shopping trip change.
Cheaper nutritious food will not, by itself, guarantee healthier eating. But it will remove one of the biggest barriers to it. In public policy, that is no small thing. The goal is not to assume that price explains everything. It is to recognize that a healthier diet becomes far more plausible when the market stops penalizing it.
Use the power of the public plate
There is another lever hiding in plain sight: institutional purchasing.
Schools, hospitals, universities, and correctional systems buy enormous quantities of food every year. Most optimize for immediate budget cost, which usually means buying the cheapest available calories.
But public institutions can do more than feed people. They can help shape the market. When a school district, hospital system, or corrections agency commits to buying more minimally processed and regionally sourced food, it creates stable demand. Stable demand gives growers and distributors a reason to invest—in acreage, equipment, refrigeration, and logistics.
Public procurement can do what fragmented household demand often cannot: create a reliable market for healthier food at scale.
Done well, it need not blow up public budgets. Seasonal purchasing, menu redesign, and reduced reliance on expensive prepackaged foods can offset much of the added cost. The real choice is whether public dollars will keep reinforcing the existing equilibrium or help build a better one.
Do not declare war on farmers
Any serious reform has to respect political and economic reality.
Commodity farmers are not villains in this story. Many operate under financial pressure and depend on the current support structure for survival. An overnight assault on commodity subsidies would not just provoke political resistance. It would create real dislocation in rural America.
That is why reform has to be additive before it is substractive.
Support for commodity agriculture should gradually be matched by stronger support for specialty crops, cold-chain infrastructure, transition finance, and fresh-food productivity. The objective is not to tear down one food economy before another exists. It is to build the next system while reducing dependence on the old one.
That may be less emotionally satisfying than a clean denunciation. It is far more likely to work.
Why this will be difficult—and where leadership must come from
This will be hard.
The institutions shaping food prices are scattered across agriculture, nutrition assistance, healthcare, education, procurement, transportation, and supply chains. They sit in different bureaucracies, answer to different constituencies, and operate on different timelines.
So this is not a one-bill fix. It is a long institutional project.
Federal leadership is necessary because only Washington can change incentives at national scale—through farm policy, nutrition programs, research support, and financing rules. State leadership is indispensable because states turn national policy into operating systems through benefits administration, education, healthcare regulation, and statewide procurement. Local leadership is where the strategy becomes real: school districts, hospitals, counties, universities, and regional institutions decide what food gets purchased, served, and normalized in daily life.
If any one of those levels fails, the strategy stalls. The task is not simply to advocate a better idea. It is to align institutions that were never designed to work together around a common economic goal: making nutritious food cheaper, more reliable, and more normal.
A market aligned with health
For years, the dominant public-health message has been some version of eat less, move more, make better choices. But that advice treats behavior as the cause when, in many cases, behavior is the consequence.
None of this is to suggest that obesity has a single cause, or that price is everything. Genetics matter. Income matters. Sleep, stress, work patterns, physical activity, and individual behavior all matter too. But those influences operate within an environment, and the market helps define that environment. It sets the relative price of calories and nutrition, determines what is convenient, and shapes what is available at scale. The point is not that markets explain everything. It is that they are the most important systemic factor—and the one most open to structural reform.
People respond to price, convenience, visibility, and time pressure. When the market makes cheap calories abundant and nutritious food comparatively expensive, rational consumers will keep making choices that damage health over time—not because they lack discipline, but because the system makes those choices make sense.
That is the deeper implication of the original argument. Obesity is a market outcome. But so is better health.
If the affordable choice remains the unhealthy one, the outcome will remain the same. If the market is rewired so that fresh food is cheaper to produce, easier to distribute, and more affordable to buy, the outcome will change with it.
A healthy diet should not be a luxury good. It should be ordinary. And if obesity is a market outcome, better health can be one too.
Sunday
The Great Napa Valley Overpour
Build It and They Won’t Come
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Ted Hall is a former Senior Partner at McKinsey & Company and a founder of the McKinsey Global Institute. He writes about economics, incentives, and how complex systems shape real-world outcomes, drawing on decades of experience across agriculture, food, wine, and consumer markets.
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