Taxing Fat-BECKER

There is growing concern in rich countries, especially in the United States, about the increase in consumption of fats and sugar, and the related increase in obesity. These trends are particularly noticeable among teenagers and even younger children, who consume large quantities of fast foods and soft drinks. Some localities, like New York City, and countries like Denmark, have proposed to either phase out or restrict sharply the use of trans fats in french fries, margarine, and other foods. The concern goes far beyond trans fats, however, and includes proposals to restrict the sale of foods high in saturated fats, such as big Macs. One proposal receiving some attention is to impose a tax on foods that contain high quantities of saturated fat in the hope of cutting down consumption of these foods. The basic law of demand states that a tax on saturated fat would raise the price of fatty foods, and thereby would reduce their consumption. A good analogy is with other "sin"taxes, such as the very heavy tax in most countries on cigarettes, or the large tax in many countries on alcoholic beverages. These taxes have greatly raised the price of these goods and reduced their consumption. For example, it is estimated that every 10% increase in the retail price of cigarettes due to higher taxes cuts smoking by about 4% after the first year, and by a considerable 7% after a few years. Responses are greater in the longer run because more people decide over time not to start smoking (or drinking), and many of those who were smoking (or drinking) eventually manage to quit or cut down the amounts used. I do not know of any estimates of the responsiveness of the consumption of bad fats to higher fat prices, but I am confident it would be reasonably large, particularly for teenagers and lower income families who have the highest rates of obesity, and are more sensitive to these prices. I also believe it would be possible to define a fat tax that would effectively target foods that are high in saturated fat content. Yet I would like to express some doubts about whether that would be good public policy. First of all, public policy should not ignore the pleasure consumers get from cheeseburgers, french fries, and other high fat foods, or for that matter from soft drinks, smoking, alcoholic drinks, and other such "sins". Good policies require that these pleasures are more than offset by strong negative public consequences. Although the growing obesity of teenagers and of adults too during the past 25 years may be partly related to the greater consumption of fats, a stronger factor seems to be the increased time spent at sedentary activities, and a corresponding reduced time spent exercising and at other active calorie burning activities. These sedentary activities include watching television, surfing the Internet, playing computer games, communicating on chat rooms and through instant messaging, listening to music on iPods, and other devices. For a careful analysis of the growth in weight of teenagers that concludes that increased sedentary activities is the main culprit, see the 2006 PhD thesis by Fernando Wilson in the Economics Department of the University of Chicago. The reduced exercise rate of teenagers is not mainly because they are too fat to have the energy to be active, but rather due to technological developments, such as the internet, computer games, iPods, television, and the like. Put differently, lack of exercise has caused obesity (to a large extent) rather than that obesity has caused reduced exercise. I doubt if there would be much of a call for taxes on computer games, or iPods, or use of the Internet in order to reduce obesity. Dr. Michael Roizen has pointed out, however, that certain types of computer games do require manual dexterity and other exercise. Suppose, however, that increased fat consumption is the major cause of the gain in weight. Is this enough reason to justify active public interventions? I raise this question not only because of the pleasure received from eating foods with saturated fats, but also because doubts have been raised about the connection between excess weight and medical problems like cardiovascular diseases, diabetes, cancers, and other serious diseases. Of course, no one denies that extreme overweight is dangerous to health, such as a body-mass index (BMI) of over 45. This would mean that a male of average height weighs over 300 pounds, and less than one % of the American male population is that heavy relative to their height. And often an important distinction is drawn between overall weight and how much is concentrated in the belly, the later being much more hazardous to health. A possibly more important consideration than the connection between fat consumption and weight may be that the consumption of fats crowds out diets richer in fruits and vegetables. Diets heavy on fruits and vegetables appear to reduce the incidence of various serious diseases, such as colon cancer and heart attacks. If such diets were to be encouraged, a more direct and powerful approach than taxing fat consumption would be to subsidize fruits and vegetables. Yet teenagers, the group that elicits greatest concern, are likely to have weak responses to lower prices of fruits, and of vegetables like broccoli. Even if excess weight and bad diets are very unhealthy with present medical knowledge, is it irrational for teenagers and other young persons to ignore the recommendations of nutritionists and medical associations, and to consume diets heavy in fats and gain weight? Not necessarily if they recognize the trade off between present pleasures and future harms, but which they may not recognize. An additional and highly important consideration that is almost never mentioned is that the next 20-30 years will probably bring at least as much improvement in medical knowledge and new drugs as the past several decades did. We now have drugs that greatly reduce the potential health hazards of high (bad) cholesterol, drugs to lower blood pressure greatly, drugs to reduce the consequences of mental depression, and many other important drugs that were unavailable a few decades ago. The not so distant future will very likely see big advances in fighting various cancers, colon and lung cancer included, in preventing or better controlling adverse effects of diabetes, in preventing or slowing Alzheimer's disease, and in reducing still further the risks of strokes and heart attacks. The many teenagers who are unaware of these medical trends, and are inactive, gain weight, eat few veggies, and consume much fat will still benefit from these medical advances during the next several decades. Yet suppose medical progress slowed down, and that heavy saturated fat consumption significantly would raise the probability of contracting a major disease in the future. Are public policy interventions then justified? A common affirmative answer relies on the fact that overweight people who get serious diseases use health resources that are partly financed by taxpayers. This argument has some merit because of heavy taxpayer involvement in health spending. But the major flaw is in the health payment system that would be largely corrected by providing stronger incentives to economize on health spending through encouraging health saving accounts, and requiring compulsory private catastrophic health insurance. These important changes in the health delivery system would give individuals much greater incentive then they have at present, partly due to greater insurance company pressure, to reduce their health spending by getting into better shape, eating better diets, and in other ways. To be sure, if the health delivery system were not greatly improved, the health spending "externality" from consuming fat would become more relevant. I believe that aside from this externality argument about the use of taxpayers' monies, there is little reason for governments to intervene in eating decisions, with some important exceptions. The main ones might include policies to give greater publicity to the health advantages of better diets, and policies that kept unhealthy foods and possibly soft drinks out of school cafeterias and school dispensing machines. Perhaps a "say no" campaign against saturated fats would work, but I am dubious about its effectiveness. Sometimes I wonder whether much of the public outcry over the gain in weight of teenagers and adults stems mainly from the revulsion that many educated people experience when seeing very fat people. Surely, though, this should hardly be the ground for interventionist policies!

Comments

[Dan C]

What an image, Becker and Posner pointing bony fingers at the obese masses - just like the ghost of Christmas future in the Dickens story. In robes and everything, except Becker and Posner are a bit more verbose.

The Russians have tried to tax vodka with mixed results. (High taxes cut some consumption but hard to maintain system.) However Russian male life expentancy is now 58. LA Times did a nice three part piece on population trends in Russia recently. They paint a very bleak picture.

I don't look forward to chasing donut "moonbakers". Of course, as moonshiners gave birth to NASCAR so moonbakers can give birth to racing donut trucks.

I don't know how far Becker and Posner want to go with this stuff. How about a tax on people with bad genes who reproduce? Require all couples to have genetic screening and if they have children without the screening, they must pay a tax. In addition, if they are considered at risk for defective children, they must pay a tax if they go ahead and give birth. Lets get the defectives out of the general population. Or at least tax them.

Aren't these less then healthy, or at least unattractive, offspring a burden on the healthy attractive members of society?

[Cyril Morong]

Chloe suggests taxing fat people. Fat people are people who pig out.

So, would this be a "pig out" tax or a Pigou tax?

[Dan C]

In my previous post I do not want to imply that Becker or Posner want genetic screening.

I meant to say that Becker and Posner could push the fat tax advocates to see how far they want to go.

So when I wrote > I meant if it is a good idea to tax fat why not ask if these advocates want to tax genitically defective people.

[Redmund Sum]

I am scared of people like the NIH Scientist who wrote " …large fraction of the American populace is not just obese, but grossly and morbidly so. Many are grotesquely obese, inhabiting huge deformed bodies … If the problem is largely caused by technological advances on the part of the food industry in advertising and food science that makes their product almost addictive, government regulation is surely the only remedy."
The government should tax people, especially scientists, who do sloppy thinking!

[W]

Some Fat Lady: Imagine the increase in government size to develop and monitor a fat tax! Imagine the questions- Would a tax cover fast food only? What about restaurant food? Would a tax apply to specific entrees only, or all food on a restaurant's menu? Would a tax apply to grocery products? Red Meat? What about peanuts or olive oil? Avocado? Would a tax apply to organic foods high in fat? Compliance would be a nightmare! As a society are we willing to pay for both the tax and the compliance costs?

Uh, not really. Our tax code is complex, so taxpayers hire H&R block. The incidence of the compliance falls on H&R block, which makes a profit. Restaurants will just hire tax attorneys and so forth. Is that a net increase in costs? Maybe not. The subsidy for grocers and wholesalers of fresh produce can trickle down to restaurants in the form of cheaper prices for produce.

The opponents of the fat tax, it seems, are just making up invalid smokescreen excuses, probably because they are fat free-riders themselves.

The time v. nutrition "dilemma" could be better rephrased as "selling out your kids' health and increasing public health costs because you don't like to shop responsibly and lack the basic skill of cooking". Of course, free-riding is rational. But as Social Security beneficiaries free-riding off the labor of their grandkids should know, it is immoral.

[Dan C]

W wants to use the tax code for social engineering.

I prefer a simple tax code that is used to generate necessary revenues. All too quickly a tax code based on rewarding good and punishing bad becomes a tax code for helping good friends and punishing the other guys friends.

I can play with an academic debate on a fat tax but the reality is it would quickly morph, in Congress, into a way to subsidize those powerful enough to organize and punish those who lack the resources to fight back.

As George Stigler might have argued on this topic, bad legislation almost always began with good intentions.

[BC]

I wonder how feasible it would be to collect a fat tax (x per mg) at the manufacturer level, and just let them build it into the price charged to restaurants, wholesalers and retailers.

[W]

W wants to use the tax code for social engineering.

No, I don't want to pay for your health costs, fat ass. I'm a right-leaning libertarian, you idiot.

[W]

I wonder how feasible it would be to collect a fat tax (x per mg) at the manufacturer level

It would be very easy.

[Dan C]

To W, I must be a left leaning libertarian because I do believe in offering mental health services to those who so clearly are in need, regardless of ability to pay.

The world is a much better place when those who need help, seek it. And if they refuse to seek help, I hope they find a cave without electricity to vent their hatred at all the evil people that fill their otherwise empty heads.

BTW what kind of upside down libertarian demands that the government force the donuts from our lips.

W says that the government imposes on him a health care system that he does not like so he has the right to impose his views of good and bad on others. That is a libertarian view? The W definition of libertarian - Rule by the spitefully deranged.

You don't need to respond here W, just put on your little tin foil hat and send me a message.

[W]

W says that the government imposes on him a health care system that he does not like so he has the right to impose his views of good and bad on others.

That's a strange synthesis of a mischaracterization of two independent arguments I made.

True enough, imposing externalities on others, e.g., your kids, can be immoral ("Let's raid Johnny's college fund to pay for meth.") But my assertion that externalities should be internalized is not based on sectarian morality nor is sectarian morality the justification for limiting government action to efficient provision of public goods.

I never said "the government imposes on me" anything. "The government" to you -- the real nutbag -- is apparently a deity with its own freedom of action. In reality "the government" simply consists of the mass desires of the people limited by generally accepted considerations of fairness. My problem is not with some deity that you believe in called "the government" but with the other people in this society who are shifting their health care costs onto me. It is not a "government" imposition -- it's an imposition by fat people.

It is true that if "the government" had lesser power over health care or taxation, fat people wouldn't be able to shift their health care costs on to me. But it is also true that "the government" is currently constituted the way it is. Instead of denying reality, I am responding to it and articulating an argument for a change from the status quo that will improve my lot. If you had read my argument, you would see I am not arguing for bigger "government" in the least -- my proposal is at least offsetting.

I fail to see how protecting my bedroom safe from the theiving intent of the fat (a tyrannical majority if ever there were one) somehow conflicts with the notion that the state has a basic duty to protect its citizens, i.e., the Nightwatchman State. http://en.wikipedia.org/wiki/Night_watchman_state

I'll also note that "Libertarian Paternalism" -- apparently -- does exist, and that left-libertarianism is a coherent philosophy.

Libertarian Paternalism: http://uchicagolaw.typepad.com/faculty/2006/10/sunstein_podcas.html

Left-Libertarianism: http://en.wikipedia.org/wiki/Left-libertarianism

A book on left-libertarianism: http://www.amazon.com/Libertarianism-without-Inequality-Michael-Otsuka/dp/0199280185/sr=1-1/qid=1160972894/ref=sr_1_1/102-7693810-2105745?ie=UTF8&s=books

Apparently, you flunked Libertarianism 101.

[W]

W says that the government imposes on him a health care system that he does not like so he has the right to impose his views of good and bad on others.

That's a strange synthesis of a mischaracterization of two independent arguments I made.

True enough, imposing externalities on others, e.g., your kids, can be immoral ("Let's raid Johnny's college fund to pay for meth.") But my assertion that externalities should be internalized is not based on sectarian morality nor is sectarian morality the justification for limiting government action to efficient provision of public goods.

I never said "the government imposes on me" anything. "The government" to you -- the real nutbag -- is apparently a deity with its own freedom of action. In reality "the government" simply consists of the mass desires of the people limited by generally accepted considerations of fairness. My problem is not with some deity that you believe in called "the government" but with the other people in this society who are shifting their health care costs onto me. It is not a "government" imposition -- it's an imposition by fat people.

It is true that if "the government" had lesser power over health care or taxation, fat people wouldn't be able to shift their health care costs on to me. But it is also true that "the government" is currently constituted the way it is. Instead of denying reality, I am responding to it and articulating an argument for a change from the status quo that will improve my lot. If you had read my argument, you would see I am not arguing for bigger "government" in the least -- my proposal is at least offsetting.

I fail to see how protecting my bedroom safe from the theiving intent of the fat (a tyrannical majority if ever there were one) somehow conflicts with the notion that the state has a basic duty to protect its citizens, i.e., the Nightwatchman State. http://en.wikipedia.org/wiki/Night_watchman_state

I'll also note that "Libertarian Paternalism" -- apparently -- does exist, and that left-libertarianism is a coherent philosophy.

Libertarian Paternalism: http://uchicagolaw.typepad.com/faculty/2006/10/sunstein_podcas.html

Left-Libertarianism: http://en.wikipedia.org/wiki/Left-libertarianism

A book on left-libertarianism: http://www.amazon.com/Libertarianism-without-Inequality-Michael-Otsuka/dp/0199280185/sr=1-1/qid=1160972894/ref=sr_1_1/102-7693810-2105745?ie=UTF8&s=books

Apparently, you flunked Libertarianism 101.

[W]

W says that the government imposes on him a health care system that he does not like so he has the right to impose his views of good and bad on others.

That's a strange synthesis of a mischaracterization of two independent arguments I made.

True enough, imposing externalities on others, e.g., your kids, can be immoral ("Let's raid Johnny's college fund to pay for meth.") But my assertion that externalities should be internalized is not based on sectarian morality nor is sectarian morality the justification for limiting government action to efficient provision of public goods.

I never said "the government imposes on me" anything. "The government" to you is apparently a deity with its own freedom of action. In reality "the government" simply consists of the mass desires of the people limited by generally accepted considerations of fairness. My problem is not with some deity that you believe in called "the government" but with the other people in this society who are shifting their health care costs onto me. It is not a "government" imposition -- it's an imposition by fat people.

It is true that if "the government" had lesser power over health care or taxation, fat people wouldn't be able to shift their health care costs on to me. But it is also true that "the government" is currently constituted the way it is. Instead of denying reality, I am responding to it and articulating an argument for a change from the status quo that will improve my lot. If you had read my argument, you would see I am not arguing for bigger "government" in the least -- my proposal is at least offsetting.

I fail to see how protecting my bedroom safe from the theiving intent of the fat (a tyrannical majority if ever there were one) somehow conflicts with the notion that the state has a basic duty to protect its citizens, i.e., the Nightwatchman State. http://en.wikipedia.org/wiki/Night_watchman_state

I'll also note that "Libertarian Paternalism" -- apparently -- does exist, and that left-libertarianism is a coherent philosophy.

Libertarian Paternalism: http://uchicagolaw.typepad.com/faculty/2006/10/sunstein_podcas.html

Left-Libertarianism: http://en.wikipedia.org/wiki/Left-libertarianism

A book on left-libertarianism: http://www.amazon.com/Libertarianism-without-Inequality-Michael-Otsuka/dp/0199280185/sr=1-1/qid=1160972894/ref=sr_1_1/102-7693810-2105745?ie=UTF8&s=books

Apparently, you flunked Libertarianism 101.

[stefanos]

You mention iPods twice as a "bad" that should be taxed, however I use my iPod mainly for exercise, and I must say, it has encouraged me to exercise for longer durations. Therefore this is a technology different than video games, TV, or the internet that require sitting down. If anything, there probably has to be a subsidy for iPods because it allows you to listen to music on the go, either that means simply walking or exercising. Same applies for the older Sony Walkman's, as the word itself suggests.

[Alex]

It seems to me that a simple story of 1-period supply and demand is not an adequate one when describing America's decision to expand its waistline.

How then, should we think about this choice?

Persons deviate from consuming the optimally healthy diet in order to gain felicity in the current period, and, because of this contemporary choice, incur a series of health related costs in the future. A person's decision to overeat, then, is like shorting a "health bond." Americans will opt to eat poorly until the utility they receive in the current period from eating marginally less healthy equalls the present value of the marginal loss of utility that they will receive in the future due to medical and other costs.

So while the current utility (and the inputs into that function such as food prices and search costs) that a person recieves from eating poorly must be taken into account, there are two other factors that must likewise be held in consideration:

1) The function that transforms poor eating today into future costs due to poor health.
Factors affecting this function include such things as be genetic dispostion and exercise rates--Wilson's PhD thesis points to this last factor.

2) The rate at which we discount these future health problems and their associated costs.
Factors such as the funding source of health care, social emphasis on appearance and interest rate will all affect this rate.

From personal annecdotal experience, Wilson's PhD arguement seems to be the most plausible explanation as a cause for America's expaning waistline. However, I am puzzled by the fact the this increase in sedentary entertainment modes and work environments has affected American and Europe an populations in different manners. Upon arriving in Europe for several months this past winter, it was obvious that these populations, equally affected by the technological and junk food revolutions, were much trimmer than the one I was used to seeing about in Chicago. I am curious as to how these other factors addressed here, but not in Wilson's PhD thesis or the above article on the notion of a Fat-Tax affect this contrast.

[Dan C]

While W is quivering under his sheets fearing that a fat person will enter his bedroom and steal something, I don't want to know what, he wants to grant the government the power to tax the contents of my cupboard. I consider the contents of my refrigerator, my business. If I stock it with cake or carrots, that is my right.

I can claim that I think sex outside of marriage is bad and I think sexually transmitted diseases are self-inflicted diseases that the public should not treat. Public health is only affected to the degree that people refuse to take steps to protect themselves. Let AIDS victims die in the gutter with the dogs and the fat people. They should all take responsibility for their actions and not impose costs on others.

And W can then tax them for excess use of the gutters.

W seems to have some notion that he can write the perfect fat tax, that will clearly obtain his goal, skinny people, without any distortions once the enforcement of the laws is turned over to government agencies. That is somewhere over the rainbow thinking.

But if you want to tax fats and you don't think private interest will fight back to affect the legislation, you must be in a cave. I can only guess at what enforcement measures you might take against inner city kids selling home made fat laden muffins on street corners.

Schools should be required to provide healthy foods and offer exercise to students. I wish inner cities were safer places for children to play outside. I wish suburbs were friendlier to walkers. I wish, I wish, I wish.

But what if I said that the biggest reason for the increase in obesity was smaller families. Larger families have less to spend on food per child and larger families have siblings who engage in healthy physical activity with each other.

Let people make their own choices and keep the tax code simple.

[Adrian]

"These important changes in the health delivery system would give individuals much greater incentive then [sic] they have at present..."

It's comforting to know that we are all human.

[W]

Dan C: Let people make their own choices and keep the tax code simple.

Taxing fat is keeping the tax code simple and is letting people make their own choices. The question is whether I should have to bear the costs of your choices. The libertarian answer is no.

[W]

I consider the contents of my refrigerator, my business. If I stock it with cake or carrots, that is my right.

Sure, if you pay for it yourself.

[W]

I can claim that I think sex outside of marriage is bad and I think sexually transmitted diseases are self-inflicted diseases that the public should not treat.

Except this, unlike efficiency concerns, is not a public reason. Are you really claiming that economics cannot be a public reason? You are a profoundly ignorant fellow, even for a left-libertarian.

[Dan C]

First, medical studies have shown that thin does not equal healthy. While obese people are at risk for many problems being thin is not the best answer. Active people tend to be thin but the improved health outcomes are more related to the active lifestyle then the weight. If you want to live a long healthy life then be active and be blessed with good genes. However, remember that many bad things are just random and not a punishment for being bad.

The treatment of disease, and a public response, is an efficiency issue. We have limited resources so how much should we spend on a disease that is self-inflicted - obesity or a sexual transmitted disease?

I am sure that some fat people may not want to pay for the treatment of the sexual diseases of sexually active thin people. i.e. public funding of drug research etc. Why should I ignore their plea and grant your rant?

You seem to want to eliminate obesity but prefer to ignore the cost of sexually transmitted diseases. Why? Who knows? Who cares? Perhaps some libertarians aspire to a thin hedonistic lifestyle.

You don't like fat people and consider them a burden on you. You blame fat people for being fat, so you want to empower the government to make them thin. I missed that part in Mills writings. One can only wonder what you would do to drug users?

Still, I feel like I am arguing with a sixteen year old. Your tax can be simple, a tax on Big Macs, and have little real impact on the general population. Or your tax can go after all sources of fat, in which case it becomes a major legislative headache as various interest groups play the game. For example, infants require high fat milk, will you tax the milk of an infant or do you start carving exceptions? What do you think elected officials of dairy states will say? Please get real.

Professor Becker and Judge Posner seem to disagree with you on this topic, so I will remain blissfully ignorant of how your mind defines libertarian. Emphasis on the blissful.

[W]

Dan C: You don't like fat people and consider them a burden on you. You blame fat people for being fat, so you want to empower the government to make them thin. I missed that part in Mills writings. One can only wonder what you would do to drug users?

The problem with arguing with straw-men is that they don't exist. The issue is not blame or badness (though, apparently, you would love to argue with a religious zealot who is an anorexic BMI Nazi). I'm not fighting for the rights of "thin people" -- whatever that means.

The issue is who has to pay for Person X's lifestyle choices. The best answer is Person X, not Person Y or Person Z. I do not care whether Person X injects himself with heroin, so long as he does not inflict any harm on anyone else. But people who free-ride on the public health system and drive up other people's taxes so they can eat steaks until their heart explodes are, in fact, inflicting harm on others. Even John Stuart Mill recognized that increasing taxes means decreasing liberty.

"You seem to want to eliminate obesity but prefer to ignore the cost of sexually transmitted diseases."

That's silly. I took your raising of STDs as a sad attempt to mock the idea of there being a non-deontological, or public, reason for taxing fat. Because there is a non-religious and non-sectarian basis for taxing fat, your STD example is no longer worth discussing. A discussion on STDs would be a different thread.

An analog to your position is this: serial drunk-drivers shouldn't have to pay higher insurance premiums than anyone else, because everyone benefits from public roads and accidents are random events.

Which, of course, is silly.

[W]

Oh, and your craven appeals to public choice theory do not work. Fat people like blaming food companies for their situation and being fat is unpopular. There is an overwhelming majority, including fat people who see themselves as victims, that would love to tap into punishing food companies. (That isn't a justification of the proposal, just a rebuttal to the notion that it couldn't be realized without being consumed by special-interest bickering). An analogy to your argument is that gun control legislation could never be passed. Of course, that's false: Plenty of people hate guns, hate gun companies, and blame them for most crime, regardless of the evidence.

[Dan C]

Perhaps anti fat advocates can follow the Danish model. Trans fats are by law, with criminal sanctions, limited to 2% of a product. It may not have led to better health outcomes, but at least this model has the benefit of being simple.

http://www.breitbart.com/news/2006/10/16/D8KQ0HF84.html

Or the anti fat advocates can look at the Disney model and just let the free market respond to changing tastes.

http://news.yahoo.com/s/nm/20061016/hl_nm/media_disney_food_dc_3

[W]

Dan C finally admits he hadn't researched the issue before he posted about it.