Thursday, January 04, 2007

On Food and Finance

Ramit Sethi on food and finances:

Above is an interesting image about how food prices have changed from 1985-2000. As you can see, "good" food prices increased, while junk food prices went down. It's no surprise that we see links between obesity and poverty (PDF with nice data).

Consumption of junk food goes up when the relative price goes down. Consumption of "good" food goes down when the relative price goes up. A perfect (and unfortunate) example of the law of demand in action.

Ramit continues:

Food: We know we should be eating better, but we don't. We don't keep track of what we eat and have no idea how many calories we're actually eating. (We think we do but we're completely wrong.) Our friends have pet theories about what's good to eat, but it's rarely informed by data and it's mostly minuatie ("you should eat nuts 18 minutes before sleeping!"). We say we're going to cook at home more, but never find time to. We spend too much on food.

What's interesting is that I feel completely comfortable managing my personal finances, but the food issue--a close parallel, I think--is really intimidating. Realizing this has really opened my eyes to how hard it is to get started on a goal, whether it's personal finance or eating better.

I never thought to contrast them before, but I think Ramit may be on to something.

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