15527_3.17_31000008087744XSmall

Mandate Broccoli?

Mar 17, 2010 • Businesses, Demand, Supply, and Markets, Government, Thinking Economically • 116 Views    No Comments

What if there was a miracle food that helped fight colds, prevent cancer, heart disease, and cataracts, and fostered healthy bones? According to several non-medical web sites, there is one. It’s broccoli.

And what if another food promoted diabetes, obesity, osteoporosis, dental cavities, kidney stones, high blood pressure, and maybe even heartburn? Some say soda does this to us.

In yesterday’s NY Times, an article described a recent study that indicated a tax on soda limited its intake.  Should we support “sin taxes”?  Quoted in Econ 101 1/2, Napoleon III “was once implored by a lady to forbid all smoking on the grounds that it was a great vice.  Laying aside his cigar he replied, ‘This vice brings in one hundred million francs in taxes every year.  I will certainly forbid it at once–as soon as you can name a virtue that brings in as much revenue.’” 

The Economic Lesson

Contemplating decisions, assessing opportunity cost through an opportunity cost chart is always a handy way to gain insight.  At the top we would have “tax soda” and the alternative, “don’t tax soda”.  Then, for each choice, we could list the benefits.  Two benefits of the tax would be healthier individuals and more state revenue.  Two benefits of no tax would be individual freedom and jobs for the soft drink industry.  Which benefits are you willing to sacrifice?

Related Posts

« »