Low-income households tend to eat less nutritious diets than other households. On average, they do not meet Federal recommendations for consumption of fruit, vegetables, whole grains, and low-fat dairy products, and they consume fewer servings of these nutritious foods than other households. The difference between low-income house- holds’ food choices and those of other households raises concerns about the affordability of healthy foods. Do low-income households have unhealthy diets because they cannot afford more healthy ones?

Affordability, defined as the ability to bear a cost, is a surprisingly complex concept to measure. If someone does not have the money or other resources to acquire an item, it is clearly unaffordable. If they have the money, but other things take priority in their budget, the item may also be unaffordable. If they decide the item is too expensive, it may also be unaffordable to them. Economists have long struggled with the different aspects of affordability—absolute, relative, and subjec-tive—in developing measures of affordability and consumer well-being.

Absolute, relative, and subjective aspects likewise complicate the question of whether a healthy diet is affordable. Individually, each aspect highlights important but limited information on food choice and budget decisions. Together, they illuminate actual consumer behavior and well-being.

The First Complication: Determining Composition and Cost of a Healthy Diet

To determine whether healthy diets are affordable one first needs some notion of what a healthy diet costs. This seemingly straightforward question is quickly complicated by both the enormous variety of foods that could make up a healthy diet and the range of prices consumers pay for those foods.

USDA has wrestled with defining the composition and cost of a healthy diet since 1894, when it published its first food plan. The plan identified quantities of reasonably priced foods needed to meet the nutritional requirements of the average American male undertaking moderate physical work.

The current USDA food plans, calculated by USDA’s Center for Nutrition Policy and Promotion (CNPP), include the Thrifty, Low-Cost, Moderate-Cost, and Liberal Food Plan. These plans specify the types and quantities of commonly consumed foods that people could purchase and prepare at home to obtain a nutritious, palatable diet at four cost levels. Even the lowest cost plan—the Thrifty Food Plan—is not a minimum cost diet of pease porridge.

To construct each plan, CNPP starts with data on how American households at different income levels actually eat and then uses a mathematical optimization model to identify a diet that takes account of existing consumption patterns while maintaining a specified cost level and meeting current Federal nutrition guidelines. The cost of each plan is calculated using national-average price estimates. In June 2008, the cost of the USDA food plans for a family of two adults and two elementary school-age children ranged from $588.30 per month for the Thrifty Food Plan to $1,151.40 per month for the Liberal Food Plan.

A Healthy Diet Is Affordable for Most Households…

For most U.S. households, these meal plans, particularly the Thrifty Food Plan, are affordable. In 2006, the cost of the Thrifty Food Plan corresponded to about 8 percent of median income for a four-person household, while the more expensive Low-Cost Food Plan totaled about 11 percent. Eleven percent of income is close to the 10-percent share that the average American household devotes to food each year. The fact that the average American household spends about 10 percent of its income on food implies that these healthy diets are affordable, or at least as affordable as the diets Americans are currently consuming.

For low-income households that receive the maximum benefit amount from the Supplemental Nutrition Assistance Program, or SNAP (see box, “SNAP—Food Stamp Program Gets a New Name”), the cost of a nutritious diet modeled on the Thrifty Food Plan is also affordable since the maximum benefit amount is equal to the cost of that Food Plan. For the nearly one out of three participating households that receive the maximum benefit, SNAP benefits alone are sufficient to purchase a healthy diet.

However, if these households pay higher food prices than those used in the cost estimates for the Thrifty Food Plan, their SNAP benefits may fall short. To help reduce this possibility, in 2007, CNPP began basing its Thrifty Food Plan cost estimates exclusively on what low-income households pay for food. Nielsen, a market research firm, provided data. Households participating in Nielsen’s “Homescan” panel report their food purchases, and Nielsen matches them with prices charged. Because households also report their income and other characteristics, CNPP is able to use average prices paid by low-income households to estimate the cost of the Thrifty Food Plan. The cost of the plan therefore, better represents average prices in the locations and types of stores typically patronized by households receiving SNAP benefits.

If they live in especially high-cost areas, some low-income households may still face higher prices than other low-income households. Average food prices are rarely what any particular household is likely to pay for food. Prices vary regionally and locally across the United States. For example, households may need more money for food if they live in New York City, as opposed to South Bend, IN.