Tag Archives: obesity

07.03.2012 | New Soda War Battles

“It’s worth fighting for. . . . This is about our economy, it’s about jobs, it’s also about our traditions and our values.”

The speaker was John Kerrey and the topic was the cranberry.

Worried that sugary beverage limitations could move far beyond soda, Massachusetts Senators Kerrey and Brown have formed a 17 member Congressional Cranberry Caucus. As the second largest US cranberry producer (Wisconsin is first), Massachusetts is the home of the $2.5 billion industry. If the Department of Agriculture bans sugary drinks from school lunches and if the Congress taxes sugary drinks, the caucus wants sugar-laden cranberry juice cocktail to be excluded.

Meanwhile, in New York, the soda industry has begun an advertising campaign to fight Mayor Bloomberg’s proposed ban on selling sugary beverages in containers that exceed 16 ounces at regulated stores. Its message? Personal choice is an unacceptable sacrifice.

Fight obesity? Preserve personal choice? Support jobs?

Thinking economically, an opportunity cost chart is always a handy way to gain insight. At the top we would have “tax sugary drinks” and the alternative, “don’t tax sugary drinks.” Then, for each choice, we could list the benefits. Two benefits of the tax would be healthier individuals and more government revenue. Benefits of no tax would be individual freedom, retaining jobs and supporting the cranberry and soft drink industries.

Remembering “choosing is refusing,” which benefits are you willing to sacrifice?

And finally, you might want to take a look at Denmark’s fat food taxes on butter, milk, pizza, any food with more than 2.3% saturated fat content. A news article from April 2011 said the fat food tax for every 2.2 pounds (one kilogram) is $2.90 (16 kroner). In addition, Denmark taxes chocolate, other sweets, sugary drinks and alcohol while limiting trans fats.

To read more about the cranberry caucus, you can look at this Bloomberg/Businessweek article and you can see what Boston.com says about it. For the New York City large size sugary beverage ban, the NY Times has this update. And here, here and here econlife discusses soda and fat taxes.

Posted by: adminEcon
Tags: cranberry caucus, cranberry juice cocktail, Denmark, fat foods tax, fat tax, obesity, opportunity cost, Pigovian taxes, sugary drink tax, tax revenue
Comments (0) Add a Comment

06.03.2012 | Super Sized Sodas

Given a huge tub of stale popcorn, people eat it.

In a 2005 study, when 158 Philadelphia moviegoers received either 14-day old or freshly popped popcorn in a huge tub or a medium size container, those with the big bucket ate more. A lot more… 33% extra if they disliked the popcorn and 45% if they liked it.

The conclusion? Even when we dislike the food, portion size impacts intake because it conveys the appropriate amount to ingest.

I don’t know whether NYC Mayor Mike Bloomberg knew about the popcorn study but he certainly agrees with its implications. He just announced that he would propose to the Board of Health on June 12 that restaurants, delis, stadiums, street carts, movie theaters–any vendor the city regulates–cannot sell larger than 16-ounce sugary drink servings. If approved, there will be a 3-month comment period, a 6-month waiting period, and then the regulation would be implemented during March 2013. Sodas sold at grocery and convenience stores, drinks that are more than 50% dairy, diet sodas, coffee, are among the drinks that are not included.

There are so many economic issues:

Is obesity a negative externality that society has the right to “regulate?” Saying that obesity costs the city $4 billion, Mayor Bloomberg identified (and was challenged about validity of the statistic) one externality.
Is individual liberty the opportunity cost of the mandate? Purchased by its opponents, there was a full page Sunday NY Times ad picturing Mayor Bloomberg dressed as a nanny.
Which unintended consequences will be created by the regulation’s incentives?
Will government distort market driven demand and supply?
Should government be larger or smaller?

This article from Cornell has additional details about the popcorn study and here and here are more facts about the mayor’s proposal.

Posted by: adminEcon
Tags: 16-ounce soda size ban, health care costs, Mayor Mike Bloomberg, obesity, opportunity cost, sugary drinks
Comments (0) Add a Comment

03.10.2012 | Health Care Costs

Looking forward to your daily Double Chocolaty Chip Frappuccino, you see that the calorie count sign says 500 calories. Change your mind? Most studies indicate that knowing a calorie count has little if any impact on purchasing decisions.

Then, you stroll to your local Whole Foods to pick up some fruit juice flavored carbonated drink. Defined by legislators as sugary, the beverage’s price includes a 7% “soda” tax. The 7% extra does not dissuade you from making your purchase. Researchers have concluded that the threshold is a penny an ounce tax. Any less and people still buy.

Next stop, the doctor’s office where you happily notice that those thick folders of paper records are gone. The practice has fully digitized and now will save all of us money by following the cost saving precepts of the Affordable Health Care Act. Yes? Maybe not. One study from Harvard says that physicians who have fully digitized tend to order more medical tests, thereby increasing costs.

Mandating calorie count information, taxing sugary drinks and digitizing health records… each is supposed to pull down health care spending. But they might not work.

The Economic Lesson

Stanford University health policy expert Victor Fuchs says we need massive policy change to depress health care spending that averages $8000 a person, double Europe’s average. Why so high?

Too many specialists.
Equipment with excessive “standby capacity.”
Inadequate support for the poor who are chronically ill.
Drug prices.
Physician income.

A NY Times bubble interactive for President Obama’s 2013 budget shows perfectly where health care spending is going. Look at the 8.4% increase Medicare and Medicaid.

An Economic Question: Would you support Dr. Fuchs’s solution of a dedicated value added tax that funds universal coverage?

Posted by: adminEcon
Tags: Affordable Health Care Act of 2010, consumer spending, deficit, digitizing medical records, federal budget, fiscal policy, health care spending, incentive, mandating calorie counts, Medicaid, Medicare, obesity, Vincent Fuchs
Comments (0) Add a Comment

02.16.2012 | Is Obesity the Government’s Business?

To fight obesity, do you support government funded weight loss education? Soda taxes? Mandatory menu calorie counts? Banned bake sales?

A recent Intelligence Squared debate provided several answers. The evening focused on the proposition, ”Obesity is the Government’s Business.” Opposed were libertarian journalist John Stossel and The Obesity Myth author, Paul Campos. On the pro side were former U.S. surgeon general, Dr. David Satcher and a Pew Foundation scholar on nutrition and metabolism, Dr. Pamela Peeke.

Even before the introductions were complete, Stossel compared prohibition to proactive obesity policy saying, “They mean well but they do more harm than good.” During the evening, he and Campos emphasized 5 points:

When it tries to regulate private behavior, government is overextending its power.
A more effective incentive, privatized health care would force people to bear the cost of unhealthy behavior.
There is no clear dividing line between healthy and unhealthy food.
We might be demonstrating prejudice about body size.
Science has not definitively proved the correlation between between obesity and higher mortality rates.

On the pro side, after starting with a story about policy makers, Dr. Satcher shared a plethora of statistics that included burgeoning obesity rates, diminished exercise and diabetes, hypertension in children and adults. The basics of the pro position included 6 ideas:

“Obesity is an epidemic.”
Obesity creates increased risk for cancer, heart disease and diabetes.
Obesity adds substantially to our national health costs.
It is government’s responsibility to fund the fight against obesity.
It is government’s responsibility to diminish the availability of unhealthy foods.
When we diminish the consumption of unhealthy foods with taxes and less advertising, long-term health care costs drop.

You can watch the debate here.

An Economic Lesson

Economically defining cost as sacrifice, whenever government helps one group, others and/or the same people experience a cost. More spent for controlling obesity means we sacrifice more spending in other areas. Or, it means we sacrifice lower taxes. Or, we sacrifice individual freedom. But, we enjoy the potential benefits of controlling obesity when the initiatives are successful.

An Economic Question: Referring to the points cited by the pro and con sides of ”Obesity is the Government’s Business,” defend the side you support.

Posted by: adminEcon
Tags: obesity, opportunity cost, regulatory policy, role of government, soda taxes
Comments (0) Add a Comment

11.18.2011 | Health Insurance Dilemmas

Assume for a moment that you are slim, love broccoli and run 4 miles each day. Should your health insurance premium be lower than the amount paid by someone with an unhealthy lifestyle? Wal-Mart, PepsiCo and Safeway say, “Yes.”

One Wal-Mart employee pays a $40 monthly smoking surcharge. PepsiCo charges $600 annually unless a smoker completes a smoking cessation program.

But here are the dilemmas:

A regressive fee, the smoker’s surcharge represents a larger proportion of lower earners’ incomes.
Low earners have less access to health clubs.
An asthmatic might not be able to participate in a mandatory exercise program.
Health checks invade privacy.
Nicotine addiction is tough to overcome.
Obesity could be genetic.
Unaffordable surcharges might lead to less insurance coverage for certain people.

And finally, our health is shaped by countless lifestyle decisions. Is it fair to focus on smoking and weight?

Reuters and the NY Times discuss the health-care issues here and here.

The Economic Lesson

An externality is the impact of a behavior or contract that is experienced by a third uninvolved party. When the impact on third parties is undesirable, we call the result a negative externality.

Smoking and obesity create a negative externality because higher health costs smokers raise everyone’s insurance premiums.

A benevolent impact on an uninvolved third party is called a positive externality. A community experiences the positive externality of flu vaccinations.

An Economic Question: Explain how charging higher health insurance premiums for people with unhealthy lifestyles could create unintended consequences.

Posted by: adminEcon
Tags: externalities, health insurance, obesity, smoker's surcharge
Comments (0) Add a Comment