05.16.09 6:23 AM ET
Does Wal-Mart Make You Skinny?
Growing alarm over the epidemic of obesity in the United States, particularly among the poor, has focused attention on the marketing of food in low-income neighborhoods. Some cities have sought to restrict the number of fast-food restaurants in certain areas, or ban them within walking distance of public schools. They argue that junk food is too cheap and available; healthier food too expensive and elusive.
They’re half right. It isn’t that low-income people can’t afford to eat healthy: A 2005 USDA study found that you can fulfill your requirement of fruits and vegetables for 64 cents per day—less than the cost of a candy bar. But access to healthy food in poor, urban areas really is a problem. There are stretches of U.S. cities where you’ll pass three Wendy’s and five convenience stores before you’ll find a produce stand.
“We know that Wal-Mart lowers the cost of food, but we figured it’s not always the best food for you.”
In the popular imagination, a big-box store such as Wal-Mart is more often seen as part of the problem than part of the solution: We associate Wal-Mart with large women in stretch pants, fat kids sucking down tubs of soda, and morbidly obese men inching down the snack-food aisle in motorized shopping carts. The store makes candy, chips, and soda ridiculously cheap—so wouldn’t Wal-Mart contribute to the obesity problem?
That’s what economists Art Carden of Rhodes College and Charles Courtemanche of the University of North Carolina at Greensboro suspected. So they conducted a study to find out. Carden and Courtemanche have done a number of studies on Wal-Mart. Carden insists they get no funding from the company, directly or indirectly. Rather, he says, the two free-market economists have been intrigued by the Wal-Mart debate and wanted to test some of the more common criticisms of the store. Generally, they’ve found that the worst fears about Wal-Mart are unfounded, and that the stores have a mostly positive impact on their communities.
But they thought this one might be different. “We expected the study to show an increase in obesity in communities with a Wal-Mart,” Carden says. “We know that Wal-Mart lowers the cost of food, but we figured it’s not always the best food for you.”
To their surprise, they found the opposite—there was a small but statistically significant reduction in obesity rates in communities with a Wal-Mart, perhaps because the store also sells fresh produce of good quality at a good price.
Broadening the study to big-box stores in general, the effect was even more pronounced. “People actually bought more produce, more fruits and vegetables,” Carden says. “Instead of just eating more, they ate a higher-quality diet—a lower-fat diet than the rest of the population.”
Wal-Mart didn’t escape the study completely unscathed. Carden and Courtemanche found an increase in alcohol purchases in communities with Wal-Mart Superstores, and increases in smoking in communities with a Sam’s Club. They also found that the presence of a Wal-Mart in the community correlates with less exercise. But the overall “Wal-Mart effect” on health was positive.
Eric Bull, a spokesman for Wal-Mart Watch, an advocacy group funded primarily by the Service Employees International Union, concedes that Wal-Mart may make produce cheaper, but he says the problem is Wal-Mart’s broader effect on the surrounding community. “Wal-Mart has always tried to avoid responsibility for the negative consequences of its business model by talking the supposed benefits of cheaper products,” he says. “But the bottom line is that Wal-Mart makes communities poorer, and poor communities are not healthy communities.”
But is that true? In a widely cited 2005 paper for the National Bureau of Economic Research, economists Jerry Hausman and Ephraim Leibtag found that Wal-Mart significantly lowers prices in the communities where it sets up shop, even for people who never shop at the store. On food alone, Hausman and Leibtag found that Wal-Mart delivers a 25 percent benefit to consumers, which has a disproportionately positive effect on the poor because they spend a larger percentage of their income on food.
The mere presence of a Wal-Mart in a community results in the equivalent of a 6.5 percent increase in annual income, which, as The Washington Post’s Sebastian Mallaby has pointed out, makes the store a bigger boon to the poor than the federal government’s food-stamps program. And Carden and Courtemanche began their study before Wal-Mart began its $4 prescription drug program, which also delivers a big potential health benefit both to Wal-Mart customers and other consumers in the area, because many competing stores were moved to implement similar programs.
Bull says all of this misses the point of his organization’s criticisms of Wal-Mart, which focus on how it treats employees. He point to a 2006 study from the Employment Policy Institute that concludes Wal-Mart could offer better wages and benefits while still delivering lower prices to its customers. Although Wal-Mart now has an employee health plan that has gotten some good reviews, Bull says barely half of its workers are insured under the plan, and many of those can only afford coverage for emergencies.
Every time Wal-Mart tries to open a store in a big city like Chicago, Los Angeles, or New York, it encounters a storm of protest from politicians, labor unions and activist groups who claim to speak for the poor and low-wage workers. Los Angeles City Councilwoman Jan Perry, who proposed the one-year moratorium on new fast-food restaurants on L.A.’s south side to combat childhood obesity, also in 2004, backed a bill to keep Wal-Mart out of that same community.
In Chicago in 2006, a proposed Wal-Mart store met with fierce opposition from groups critical of its labor practices—a position just reiterated by Mayor Richard Daley. So instead, Wal-Mart opened in Evergreen Park, one block outside the Chicago city limits. The store received 24,500 job applications for just 325 positions, and now generates more than $1 million per year in taxes for the small town while boosting revenue for local businesses.
Had Chicago’s politicians not been so obstinate, that economic windfall could have been enjoyed by the city’s low-income, mostly minority Chatham neighborhood—whose residents might have dropped some pounds as well.