Friday, June 22, 2012

Tackling Obesity

Mayor Bloomberg’s ban supersized 16 ounce servings of sugary beverages in New York’s restaurants, street carts, movie theatres, and stadiums has placed the issue of obesity squarely on the map.

It is as American as burgers and apple pie. Yet, Mayor Bloomberg who founded a business empire on free trade, wants to restrict the sale of sugary drinks to the public. There is a simple reason behind it: obesity costs the city billions a year in related health expenses. A better way of reducing the burden is by way of prevention.

Gary Becker of the University of Chicago, whose insights into the rational thought processes behind addiction opened the door for others to push the boundaries that separate economics and psychology, discusses the opposing views in this debate:

On one side of the question are the libertarians who argue that individuals, in particular consumers, should have the freedom to make their own choices unless they hurt others. According to this view, consumers have the right to drink and eat what they prefer, but driving while drunk should be punished because drunk drivers are more likely to get into accidents that hurt others. One qualification is that when consumers do not have enough information to make good decisions, governments may help in providing that information. An example is the requirement that packaged foods show the amount of fat and certain other ingredients they contain.

On the other side are those who claim that many consumers are not able to make decisions in their self-interest. These consumers, according to this argument, can be fooled by the way choices are presented, may have limited self-control, may rely on inefficient rules of thumb, or for other reasons make bad choices. There is even a literature on “libertarian paternalism”, which argues that governments “ … should attempt to steer people’s choices in welfare-promoting directions without eliminating freedom of choice” [emphasis mine].

To tackle obesity, there are a whole slew of policy options. On the less interventionist side, public campaigns such as the one championed by First Lady Michelle Obama aim to inform and advocate healthier eating habits and lifestyle choices. Part of this includes labelling on menus that provide the caloric content of the items served. 

The problem is they do not always work, and businesses complain that they are an additional cost burden. Some Republicans like Sarah Palin believe that requiring such labelling is already too intrusive much to healthy food advocate Jamie Oliver's chagrin.

It is true that the costs of information cannot be taken for granted, but one can argue the benefits of supplying such information outweighs whatever costs are involved. The same sort of argument is behind providing warnings on cigarette packs or alcoholic content on liquor drink bottles. Mayor Bloomberg’s approach however is based on the notion that people don’t always heed such warnings.

If information and advocacy campaigns have limited success, particularly to those who are predisposed to certain forms of behaviour (as proven by neuroscience), the more interventionist policy tools might be called for including imposing a combination of taxes and subsidies, regulations and restrictions on the unwanted commodities and activities.

Becker believes that a ban on large drinks might actually lead to the public consuming more sugary drinks rather than less. He supports instead the idea of not serving sugary drinks to children whose discretion as consumers can still be moulded

Suppose that drinks come only in 10 and 16-ounce sizes. If the 16-ounce size were banned, enough consumers might substitute 2 10-ounce drinks for 1 16-ounce drink to increase total consumption of these drinks. Of course, the drink market might respond with offering other sized drinks, but the main point would still hold that the ban could raise consumption of sugary drinks.

Children are less likely than adults to make an effective trade off between current pleasures and future costs. This is a traditional reason for distinguishing between children and adults in formulating policies. The implication in the case of sugary drinks would be to restrict access by children to these drinks. For example, these drinks could be banned from schools and other places where children congregate, or young persons might not be allowed to purchase these drinks [emphasis mine].

One other approach to curbing consumption of unhealthy food and drink is the so-called fat tax. Recent research has demonstrated that for this to work, a threshold level of 20% needs to be imposed as a tax to lower consumption among adults. Denmark, France and Hungary already have introduced some version of a junk-food tax or sweetended-drink tax. Twenty three states in the US including New York have done the same.

Though the effects of this tax may be regressive as the poor generally consume more of it as a proportion of their intake, if the tax were used to expand health insurance coverage to the lower income classes, it might correct the regressive nature of the tax. It would at the same time improve the fiscal positions of cash-strapped governments.

Despite what the business lobby and libertarians say, the public cannot turn a blind eye towards the problem. With over a third of its adult population now clinically obese, costing American taxpayers $150 billion annually, and with 20-50% of the populations obese in countries as diverse as Kuwait, Columbia, the Philippines and China, it is high time that policymakers focus on tackling the problem before it literally eats them out of house and home.

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