Fat and Broke in SuburbiaJune 26, 2008
Does living in suburbia cause us to get fat and go broke? Maybe.
According to a recent article article in Slate (Hey fat spender) having love handles and a bare wallet are related. The crux of the argument is that eating out is both expensive and at the same time also makes you fat. All that butter and cheese costs money you know. And as every restaurant cook knows, the key to very tasty food is —- add more fat. So, a very casual look at the U.S. savings rate and obesity rates finds that they are inversely related. So, maybe we could all go on a diet and increase the savings rate!
I doubt it.
The issue that is helping drive both of these outcomes (big and broke) is suburban living (see my post “Can High Gas Prices Help Us Save”). Yesterday’s NY Times had an article about families rethinking suburbia in light of high gas prices. And there has been a flurry of recent articles about the implications largescale re-urbanization (e.g. Suburbs a Mile Too Far and Ghosts of the Cul de Sac). You can now add high food prices to high gas prices as components of the increasing cost of the long commute .
Eating out has always been a lot more expensive than cooking, but restaurant prices typically rise faster than food prices on a per dollar basis because a common pricing rule at restaurants is to use a constant percentage mark-up based on the cost of the food. So, if the mark-up is 300% (not uncommon) a $1 increase in food price for a particular dish leads to a $3 increase in the menu price. A restaurant could lower its margins, but there is a limit to this as many of their other costs (heating, gas for cooking) are increasing as well. So food is getting more expensive, and eating out is getting a lot more expensive.
People with long commutes eat out (or get carry-out) more often. They spend more money on gas. They walk less and drive more when they run their errands So, we are back to the link found in the Slate article, fat and broke in suburbia.