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02/07/2010

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Robert Wiblin

"Surely that would be a foolish justification for subsidizing smoking."

Why is that? It seems like a good reason to me, unless you think people are already biased towards smoking and against a long life for some other reason.

TGGP

Karl Smith thinks the ideal "positive externality" citizen is a smoker, precisely because he/she subsidizes others through cigarette taxes:
http://entitledtoanopinion.wordpress.com/2010/01/27/the-forgotten-perhaps-non-existent-man/

Alena

I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

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darkmonohue

Professor Becker does not wish to tax soda. Perhaps we could agree, though, that it would be a good idea to end the massive agricultural subsidies that make unhealthy foods (such as sodas made with high-fructose corn syrup) cheaper than healthier alternatives?

Talib Haqq

I've just discovered this blog, and I am enjoying it.

One comment: I do not believe that insurance companies are prevented by law from requiring overweight consumers from paying higher premiums. I believe it is actually the case that certain plans do, in fact, charge higher rates for those who are overweight. Perhaps Professor Becker could please look into this to verify if this is the case. I do not believe that the ADA prevents this kind of resonable "discrimination."

Brian Davis, Austin, TX

ADA has a safe harbor for discrimination that an insurer can defend as actuarially sound. That's why Congress was driven to pass yet another law prohibiting genetic and family health history discrimination. Be that as it may. The larger fact is that MOST workplace-based health coverage in America today ISN'T "insurance." It's the employer or labor union self-insuring under ERISA to control costs and to bypass State laws that require more from insurance policies than States can require from employers and unions. The verdict is still out on how the ADA will affect NON-insurance ERISA health-welfare plans. Apart from being an observable, measurable characteristic, is obesity a "disability," specifically, a substantial impairment (physical or mental) of a major life activity? Backtrack about 15 years, HIV+ wasn't a disability until medical community opinion tied it to impairment of procreativity. Bingo, ka ching.

mike

It does not follow that because we do not subsidize smoking, we should not regulate unhealthy activities. Costs and savings are not the only variable. The fact that obesity creates costs is merely an additional reason to regulate it, not the only one. The main reason is its danger to an individual. You are dismissive of subsidizing smoking precisely because of this moral intuition.

Gordon Longhouse

The reason for regulation in a free market economy is make certain things off limits to competition. Airlines are not permitted to compete for passengers or capital by saving money through skimping on safety. Likewise for restaurants and food producers.
Passengers are not able to inform themselves of an airplanes airworthiness prior to boarding and the cost of acquiring information on an airline's safety practices -air crashes- is too high.
I do not see the same issues housing finance arising in respect of housing finance so long as borrowers are given the appropriate information.
Here in Australia most home loans are ARMs as most borrowers are unwilling to pay a premium to lock in interest rates for a period of years. Interest Only mortgages are employed by property investors seeking to maximise cashflow. Equity Release loans are a recent innovation being marketed mostly to elderly cash poor-asset rich people. Even the despised Low LVR loans have a place though that place is less than 10% of the market by value (around 8%).
All of these products have a place and people are capable of managing them in the absence of outright deceit.
It appears from this -admittedly long- distance that there is considerable blame shifting and finger pointing going on here.
The property bubble and subsequent collapse was caused by excessive easy money, the information disconnect between borrowers and ultimate lenders in securitisation structures, and lax banking regulation. As Becker says the only thing borrowers did not know about the property bubble is that it would end.
If the regulators are serious about turning around debt markets they will end requirements that mortgage loans be non-recourse. Non-recourse lending takes away an incentive on the part of the borrower to not borrow too much or deceive the lender with false information about income and asset value.
If they were REALLY serious they would end mortgage interest deductibility for the acquisition of private assets, a subsidy for and incentive to borrow.
If securitisation is to continue, the information asymmetries -and especially the agency problems of credit rating agencies- will need to be sorted. Banks must not be permitted to carry securitised assets off-balance sheet.

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It will be much better if they will NOT SELL CIGARETTES anymore. Even tobacco manufacturers put a FRIENDLY REMINDER at their package, it seems the consumers don't pay attention to it.

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Smoking per se (if we consider this as inhalation of smoke from burning plants) is known for a long time. Frescoes in the Indian temples depict the holy ascetics, inhaling the smoke of aromatic incense. Smoking pipes were found during excavations of tombs of the nobility in Egypt, dating from the XXI-XVIII centuries. BC. Oe. Great Herodotus, describing the life and customs of the Scythians, wrote that they have a habit of inhaling the smoke burning plants. As argued by the German ethnologist Hugo Obermeyer, smoking cannabis by means of pipes were known to the ancient Germans and Gauls in the I century BC. Oe. It is said in ancient Chinese literature.

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But, Did you know that the fast food and casual dining restaurants you eat in every day have secret menu items? A select few are in on the secret and now you are a part of this culinary elite. We aren't just talking about the barely secret In-N-Out Burger "hold the bread, lettuce wrapped burger,” oh no. We have items all over town, including an unhealthy smoothie at Jamba Juice and a San Francisco-only Mc10:35. The Consumerist is all over this, and now you can be too, right?

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I believe that On a Consumer Competence-Becker Agency will hurt rather than help consumers.

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It does not follow that because we do not subsidize smoking, we should not regulate unhealthy activities. Costs and savings are not the only variable. The fact that obesity creates costs is merely an additional reason to regulate it, not the only one. The main reason is its danger to an individual. You are dismissive of subsidizing smoking precisely because of this moral intuition.

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Thanks a lot gary for this article and all the others...

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There are many foods that increase cholesterol levels and you should avoid them as most of them are also bad for your figure. For example, butter and similar fatty products we use for cooking. These products have a high concentration on fat that together with other fat we take during the day can increase the total fat levels very much.

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As competition is increasing day by day and it is difficult to gain consumers favor and every company should work hard to gain more consumer competence. Thanks for sharing this information, very informative article.

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This racial-gender difference in obesity rates is most likely related to differences in the life situations of African-American men and women rather than to differences in their knowledge of the health cost of obesity.

milton

The property bubble and subsequent collapse was caused by excessive easy money, the information disconnect between borrowers and ultimate lenders in securitisation structures, and lax banking regulation. As Becker says the only thing borrowers did not know about the property bubble is that it would end.
If the regulators are serious about turning around debt markets they will end requirements that mortgage loans be non-recourse. Non-recourse lending takes away an incentive on the part of the borrower to not borrow too much or deceive the lender with false information about income and asset value.
If they were REALLY serious they would end mortgage interest deductibility for the acquisition of private assets, a subsidy for and incentive to borrow.
If securitisation is to continue, the information asymmetries -and especially the agency problems of credit rating agencies- will need to be sorted. Banks must not be permitted to carry securitised assets off-balance sheet.
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