What's a reasonable amount to spend on groceries per month?

What’s a reasonable amount to spend on food per month?

Though a simple question on the surface, it’s difficult to answer as it depends on so many factors: age, sex, geographic location, dietary preferences, education, ability and willingness to cook, and many others.¹

Given the many variables, the only way to come up with some sort of answer is to take the mythical “average” American and attempt to figure out how much money it would take to feed them a healthy diet on a constrained budget.

Luckily, this is exactly what the USDA—U.S. Department of Agriculture—has been doing since the 1960’s.

In 1962, the USDA released the Economy Food Plan² and in 1975³ they replaced it with the Thrifty Food Plan.⁴ The Thrifty Food Plan was then updated in 1983⁵, 1999, and 2006⁶ to account for changes in dietary guidance, food prices, and consumption patterns.

A key point to note is that the Thrifty Food Plan was required to remain cost-neutral relative to the 1962 plan, meaning that while the foods incorporated into the plan could change, the only adjustment to the cost was driven by inflation.

The 2018 Farm Bill⁷ eliminated the cost-neutral requirement, however, and mandated that the Thrifty be updated by 2022 and every five years thereafter to reflect current food prices and dietary guidance.⁸

Without the cost-neutral requirement, the USDA got to work on re-answering the question, What is a reasonable amount to spend on groceries?⁹

Their answer is the Thrifty Food Plan, 2021.

How was the Thrifty Food Plan created?

For the 2021 Thrifty, as there was no cost-neutral requirement, the USDA started by creating a healthy, practical diet and only then figured out how to meet these dietary requirements at the lowest cost.

To do this, they divided the American population into 15 age-sex groups and for each group created a Market Basket¹⁰—weekly amounts of foods in purchasable form—that met the dietary requirements.

All foods are prepared at home, though not necessarily from scratch as the 2021 Thrifty takes convenience and ease of preparation into account.

This means that items such as canned beans are favored over dry beans because while dry beans are cheaper, they require time and effort to cook.

Following SNAP regulations, foods that are hot when bought (e.g., roasted chicken), foods purchased at restaurants or fast-food chains, and alcoholic beverages are all excluded.

Finally, as required by law, the cost of the Thrifty is the same across the United States¹¹ and is adjusted for inflation each month¹² using the Consumer Price Index (CPI).

A deeper dive into the creation of the Thrifty Food Plan, 2021

The above is a good summary of how the Thrifty Food Plan, 2021 was created but, if you’re a nerd like me, it leaves open questions. So let’s dive a little deeper.

A quick look at optimization models

The “brain” of the Thrifty Food Plan is an optimization model created by a team of USDA economists.

The math behind optimization models is highly complex, but the concept is simple—given a problem and a set of inputs and constraints, the optimization model attempts to find the best solution.

For example, a shipping company wants to deliver its packages at the promised speed and has an optimization model to help them meet this goal.

The inputs to the model might include the distance the package has to travel as well as available transportation methods (e.g., air, land, or sea), while the constraints might include a price limit (e.g., under $2 per package), the promised delivery speed (e.g., 2-day shipping), and following the law (e.g, not speeding or running red lights).

Based on these inputs and constraints, the optimization model generates a list of possible solutions.¹³

For example, for a small package that needs to go from Austin to Houston within a week, the model might suggest transporting the package by truck and waiting until the truck is full to lower the cost.

For the USDA optimization model, the inputs were current consumption patterns and the nutrient composition and average price of each food item, while the constraints were practicality, cost, and dietary requirements.

The inputs to the Thrifty Food Plan

Let’s look at the three inputs of the Thrifty’s optimization model: current consumption patterns, food prices, and food nutrient composition.

In order to determine current consumption patterns, the USDA used the data collected in the What We Eat in America (WWEIA) survey. This data is the best source for total food and beverage consumption in the US and can be used to get a good feel for the day-to-day diet of Americans.¹⁴

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The USDA divided the WWEIA respondents into the 15 age-sex groups and excluded those with diet qualities below the median.¹⁷

This input served to create Market Baskets that, while healthy, didn’t suggest unrealistic deviations from current consumption patterns, meaning that if a food item is rarely eaten, then it’s not part of any Market Basket, even if the item is healthy and cheap.

For price data, the USDA relied on data from the IRI InfoScan.¹⁸

The IRI InfoScan uses in-store scanners to track all food items sold at their affiliated retailers—grocery stores, convenience stores, and dollar stores, among others—providing a clear picture of the amounts and costs of the food and beverage items purchased in the US.

Using this data, the USDA derived national average unit prices for each food and beverage item while considering food form and customer preferences.

For example, beans, whether in canned or dry form, were considered as a single item and since canned beans are purchased more often than dry beans, the average price for beans is closer to that of canned beans.

Similar cases apply to other foods sold in various forms, such as ready-to-serve juice—more expensive, but more commonly consumed—versus frozen juice from concentrate.

When calculating prices, the USDA even considered the detail of edible weight versus the retail weight for each food item.

For example, a pound of celery from the store won’t yield a pound of edible celery once the leaves and the base of the stalk are removed meaning that the actual cost of a pound of celery is slightly greater than the retail cost.

Finally, the USDA Food and Nutrient Database for Dietary Studies (FNDDS) was used to determine the nutrient composition of each of the food and beverage items.

At this point, the USDA knew what foods Americans eat—and in what form and proportion—the price they paid for these foods, and the quality of their diet.

The constraints for the Thrifty Food Plan

Let’s now look at the three constraints of the Thrifty’s optimization model: dietary requirements, practicality, and cost.

There are two components to the dietary requirements: energy (number of calories required) and nutrient recommendations (the macro and micronutrients required.)

Calorie needs for each of the 15 age-sex groups were determined by using median heights and weights for the U.S. population and assuming a low physical activity level for all groups except for children ages 2 through 11, for whom an active level of physical activity was assumed.¹⁹

Nutrient recommendations are based on the Healthy U.S.-Style Dietary Pattern which in turn is based on the Dietary Guidelines for Americans, 2020-2025 report. These guidelines establish DRIs—Dietary Reference Intakes—for macronutrients (i.e., protein, carbs, and fats), micronutrients (i.e., vitamins and minerals), and other food components (e.g., dietary fiber).²⁰

For example, the DRI recommends deriving 45-65% of one’s calories from carbs—for a male in the 20 to 50 range, for instance, this translates to 338 to 488 grams of carbs per day.

To account for food waste (i.e., plate waste and spoilage), the calorie needs and nutrient recommendations were increased by a 5% food-waste-adjustment factor.

The USDA then applied practicality constraints to better reflect consumption patterns and to meet the nutrient recommendations for food-groups—vegetables, fruits, grains, dairy, protein, and oils—and food-subgroups—dark green vegetables, starchy vegetables, whole grains, refined grains, etc.²¹

This constraint prevented the optimization model from recommending a diet mostly composed of eggs and beans, which are nutrient-dense, cost-effective ways to meet the recommended daily nutrient values, and allowed for the creation of a Market Basket that includes vegetables, fruits, and other sources of protein.²²

It also allowed the USDA to add coffee and tea to the Market Basket for adults as the majority of Americans consume at least one cup per day. The optimization model would have otherwise excluded coffee and tea as they don’t provide many nutrients.

Finally, the USDA applied a cost constraint. The cost of the 2006 Thrifty Food Plan, after being adjusted for inflation, served as the starting point. This constraint was then increased in increments of $0.01 until the model generated a viable Market Basket for each age-sex group.

What are the findings of the Thrifty Food Plan?

$835.57 per month for a reference family of four—a male and a female, age 20 through 50, and two children, one age 6 through 8, the other age 9 to 11.

This is the amount the Thrifty Food Plan, 2021 concluded is required to provide a nutritious diet for a resource-constrained household.

After adjusting for inflation, this represents a 21% increase from the Thrifty Food Plan, 2006, equivalent to an extra $1.20 per person per day.

One reason for the increase is the 600 additional calories per day due to the increase in median weight for adults since 2006 as well as the decision to change the activity level for children under 12 from low-active to active.

Another reason is the updated guidance in the Dietary Guidelines for Americans. In particular, the increase in the recommended amounts of seafood had a marked effect as seafood is among the more expensive food-subgroups.

Summary

The 2021 Thrifty Food Plan is a good starting point for discussion.

As I don’t have children, I can’t comment on the validity of the $835.57 figure. Instead, I’ll look at the Market Baskets for a male and a female age 20-50 to reflect the 2-person household for my wife and I.

The monthly cost of the Market Basket is $258.46 for a male and $207.38 for a female, for a total of $465.84. A two-person household, however, has a 10% adjustment factor²³ meaning our total budget would be $512.42.

At first glance, this number seems ridiculously high given that my wife and I spend around $200 on groceries per month. It’s even more ridiculous when we consider that the thrifty plan is the lowest cost plan—the low-cost plan would let us spend $529.70, the moderate-cost plan $655.70, and the liberal plan $820.30.²⁴

We’re both active, health-conscious individuals—we walk around 5 miles every afternoon, run or do weights a couple of times a week, avoid added sugar and processed foods, and only drink water, coffee, and tea. Our weight and bloodwork are in the healthy range.

The matter of privilege, of course, can’t be ignored. We own a car and have a Costco, an Aldi, and a Walmart within twenty minutes. We also have the time, willingness, and education to meal prep on the weekends. These are advantages not everyone is fortunate enough to have.

Finally, there’s the fact that we’re price conscious and very good at avoiding food waste and shopping in season. And we eat a vegetarian diet which replaces the more expensive categories of meat, poultry, and seafood with tofu, beans, and nuts.

I mention all of this for two reasons. One, to show that it’s complicated to compare individual cases to the baseline. And two, to show that with a few small optimizations even the “thrifty” food plan budget can easily be cut in half for many people.

All in all, while the inputs and constraints of the Thrifty Food Plan make sense when looked at individually, the result given by the optimization model seems excessive.

I wonder how the results would change if grocery store constraints were added (i.e., shopping at Aldi instead of Whole Foods) and the nutrient recommendation constraints were relaxed as it’s possible to be perfectly healthy without eating the exact recommended food-group and -subgroup amounts recommended by the dietary guidelines.

Hopefully this extensive look into the Thrifty Food Plan was at least somewhat interesting. As a followup, I’ll be writing a post soon to share how we eat a healthy diet on $200 a month.

Stay healthy!