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Thursday, July 29, 2010

"The Weight Watchers"

Should government "vilify" unhealthy products?:

The weight watchers, by Edward L. Glaeser, Commentary, Boston Globe: ...Should public policy respond to our expanding waistlines with benign neglect, traditional taxes and regulation, or sophisticated psychology?
Benign neglect is the policy preference of libertarians who argue that what we eat is our own business and that there’s a lot to like about a steak or a sundae. ...
I share the libertarian faith in personal freedom, but there are good reasons for public health-related interventions. People don’t bear the full costs of illnesses, which drain the public coffers and impose hardship on friends and relatives. ... Some anti-obesity policies can also be justified as a counterweight to the diabetes-supporting subsidies of cheap corn syrup.
The oldest, simplest, and most extreme alternative to the libertarian approach is an outright ban, which unfortunately also promotes a black market. The modern, more moderate variants of prohibition are place-specific, such as restricting the sale of junk food in schools... That intervention is easy to defend since the state has a responsibility for the well-being of children..., and public schools are already public space.
But widespread bans on soda sales are neither feasible nor desirable, which leads us to sin taxes, like those on tobacco and alcohol, that attempt to balance individual freedom with public health. ... Taxes are a relatively efficient means of limiting activities that impose costs on others, but since poorer people consume more unhealthy food,... taxing that food is regressive.
It is more difficult and expensive to prepare food that is both tasty and healthy than unhealthy tasty food (ladle on the fat, salt and sugar), which helps explain the link between poverty and obesity. ...
The political unattractiveness of taxation has led some to support subsidizing ... the magic of Madison Avenue to make people shun unhealthy products. New York City embraced these counter-consumption policies with graphic anti-smoking signs and vivid ads that make it seem as if soda drinkers are gargling down fat. ...
Encouraging exercise makes sense, but there is much less to like about public programs that vilify activities practiced by thousands of citizens. In a sense, these public announcements are just revenue-less taxes... — the fact that the higher cost is psychological rather than financial is purely accidental.... Stigmatizing the food choices of the poor is no less regressive than taxing them. ...

Soda taxes, bans on junk food in schools, and even reform of the food stamp program are all serious responses to the obesity problem. But there is plenty to dislike about public attempts to demonize different types of consumption..., we are better served by a government that keeps to taxation rather than vilification.

I think there are two things here that need to be kept separate in the arguments Glaeser is making. First, there is the use of taxes to correct for market failure due to the presence of externalities in the consumption of legal goods. If people are imposing substantial costs on others, and if taxes, regulation, and the like are ineffective corrections, then perhaps vilification should be considered as a remedy, but only as a last resort. Second, taxes are used to discourage the use of products we'd like to make illegal, but don't due to worry that an outright ban will the create problems such as black markets that are even more troublesome than the banned activity itself. Here, since we'd like to make the good illegal but don't due to practical concerns, vilification does not seem to be as objectionable as a means of discouraging the behavior.

There are instances, e.g. anti-littering campaigns, where vilification does seem to be the best approach. In part, this is because it's difficult to police and hence difficult to stop through traditional policing and penalties. But littering is illegal, so there doesn't seem to be much of an issue with demonizing this activity. The question is about vilifying legal goods, should the government do that? If it's something that is difficult to tax monetarily or to police effectively, e.g. not letting people into traffic on the freeway which slows traffic generally and causes external effects, then perhaps social vilification of the behavior is the best solution to the problem.

I'm not sure I have this right, but it's late and I'm supposed to be on vacation so I'll leave it at that. My gut instinct is against government ever demonizing anything, so I'm not fully comfortable with calling for government to start nagging people about what they choose to eat, etc. What do you think? Is vilification ever okay? If so, when?

    Posted by on Thursday, July 29, 2010 at 02:07 AM in Economics, Taxes | Permalink  Comments (100)


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