Food insecurity and its impact on the economy

Food insecurity is when someone is not sure if they will be able to eat in the future and when they do not believe that there will be enough food in their household to support a healthy life.

Whether someone has access to food is considered a social determinant of health – a state they are born into that has a significant impact on their health and life. As such, it is an important factor to consider when assessing equity in health care.

Ultimately, when food is not reliably available to families, it can have long-term effects on the wider economy. Food insecurity not only hinders physical development, it also shrinks productivity, wastes money and hurts educational outcomes, thereby reducing overall lifetime earnings for those who experience it.

Key findings

  • Food insecurity is when people are not sure that they will have access to food at all times.
  • Food insecurity is a social determinant of health, one of the factors that helps explain large differences between groups of people.
  • The main costs of food insecurity include the costs of disease and hunger and reduced lifetime income.
  • Food aid programs are considered “automatic stabilizers” that provide food to families and also stimulate the food industry and supply chains.

How does food insecurity affect the economy?

When people don’t have access to enough food, it can have several significant negative effects on the economy, including affecting the health of the workforce.

For people, malnutrition and the diseases that food insecurity can cause lead to more absenteeism and are associated with lower wages. These diseases, especially when they are chronic, also require huge funds for treatment. Food insecurity is also linked to low wages and neighborhood segregation.

Food insecurity, in its milder forms, can be less fatal than the hunger often present in emerging economies, known as extreme hunger. Rather than a complete lack of nutrition, food insecurity refers to times when access to food is unstable and is typically tracked in developed economies. This may not cause clinical signs of malnutrition.

The effects of food insecurity can be severe for children. It can delay cognitive development, cause additional problems with education and behavior, and increase the risk of chronic diseases.

Impact on the workforce

Stronger economies have a higher labor force participation rate, which is the percentage of working-age people who are working or looking for work. A healthy labor market is one in which the labor force participation rate is high and the unemployment rate is low. Without sufficient means of livelihood, workers may find participation in the labor force extremely difficult.

Prolonged food insecurity can lead to higher rates of chronic disease, causing both a loss of economic activity when people are out of work and high health care bills. To participate fully in the workforce, employees need adequate nutrition.

Food insecurity among children also affects their parents’ ability to work. When children cannot go to school, parents may have to stay at home with them, which may mean that they are not contributing to the economy. The end result is lost productivity.

And even when a worker is still able to function or has no children, food insecurity can negatively affect their performance. For example, it can increase “presenteeism” when employees try to work through illness. One way companies calculate productivity is to measure output, or units produced, against total labor hours. Ultimately, food insecurity can reduce what a worker can produce and therefore reduce the competitiveness of his employer.

Impact on children

Access to a stable food supply is critical to children’s healthy physical and cognitive development. Food insecurity can lead to several adverse impacts. In children, food insecurity can derail development into adulthood. Education in particular can suffer if children cannot concentrate due to hunger.

Food insecurity can lead to more physical illnesses in the long term, such as diabetes and heart disease, as well as more mental and emotional problems that can make learning difficult. It also leads to more social problems.

Those who suffered from food insecurity as children are reported to be more likely to skip school or try to work through hunger, which limits performance. Absorption of information is more difficult when a student is distracted by hunger pangs, regardless of age.


Food insecure students tend to fall behind in school. They can be emotionally, socially, educationally and even physically unprepared for work later in life. This further hurts the economy as it affects the performance of future workers and in turn productivity.

Health care costs

Food insecurity can lead to significant health care costs. According to one analysis, food insecurity increases disease costs by tens of billions nationally while reducing lifetime earnings. This includes lost work time and productivity and the cost of treating illnesses.

In the US, diabetes is just one of the chronic diseases exacerbated by food insecurity. The disease accounts for roughly $1 of every $4 spent on health care in the country, including about a third of Medicare drug spending.

Diabetes causes high rates of complications and hospitalizations, along with a higher likelihood of comorbidities, including coronary heart disease. From an economic point of view, this means a large expenditure of resources for medical care. Chronic diseases with other causes can also be exacerbated by lack of food security.

Impact of decisions on food insecurity

Attempts to address food insecurity also have economic implications.

State investments

Governments often spend money to try to reduce food insecurity. Their investments to stabilize food access can positively impact the economy.

In the US, people who need access to food can get government-funded food stamps. Money spent by the Supplemental Nutrition Assistance Program (SNAP) provides economic activity by triggering spending at farmers markets, grocery stores, and places where the benefit is accepted.

Federal studies have estimated that every $1 in federal spending increases gross domestic product (GDP) by $0.80 to $1.50, according to the USDA, the federal agency that administers America’s food stamps. SNAP is considered an “automatic stabilizer” in economic recessions because it naturally grows during economic downturns and shrinks during booms (when fewer people need food stamps).


Low-income SNAP users tend to use up their benefits quickly. They also tend to rely less on benefits when the economy is booming.

Charitable contributions

When addressing hunger is left to nonprofit organizations, charitable contributions to those organizations are directed toward hunger and food insecurity rather than other social issues. Anti-hunger advocates estimate that this money totals $17.8 billion in charitable donations.

These donations represent opportunity costs.

Why is food so important to the economy?

Food production is a significant part of the economy. In the U.S., food-related industries account for more than 5 percent of gross domestic product and account for roughly 12 percent of household budgets, according to the U.S. Department of Agriculture.

Where does food insecurity have the greatest impact?

In the United States, food insecurity affects more than twice as many black and Hispanic people as white people, according to the Center for Food Research and Action, an anti-hunger advocacy group. Geographically, food insecurity is most common in the South region, followed by the Midwest region.

How does food waste affect the economy?

Food waste raises the price of food for consumers because it leads to higher costs associated with transportation and disposal, which requires labor, land and energy. Wasted food can also represent a missed opportunity to provide food to hungry people.

The bottom row

Food insecurity can affect current labor force participation and harm the future labor force, such as chronic school absenteeism among food insecurity children. This uncertainty also exacerbates chronic diseases, which can lead to staggering health care costs. But some solutions to food insecurity, such as social security programs, can stimulate the economy.

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