Monday, October 30, 2006

A Fat Tax

Economist Gary Becker considers a tax on foods with saturated fat as a solution to the problem of obesity in the United States.
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.

He ends up arguing against the use of a tax on foods with high levels of saturated fat due to the fact that there are other major causes of obesity, the likelihood of future medical advances, and a doubt of whether it would be an effective tax.

(Source: Becker-Posner Blog)

8 comments:

Anonymous said...

These kind of taxes worry me somewhat. Instead of trying to earn an extra amount of money to help deficits or pay for new social programs, taxes are starting to be used as a tool of moral coercion. I can see maybe the tax on cigarettes, as they are known to be only detrimental to health; however, when this tax is applied to things that are less clear cut like food that's labeled unhealthy, I think we might be overextending our rights of regualtion. I could see these taxes being used by an impartial government to regualte other things deemed immoral by the majority. For example, if gay marriage is legalized, a conservative government could put an obscenely high tax on gay marriage licenses to try to reduce the amount of marriages. They might even justify it saying that the loss of "family values" is unhealthly for children. Maybe it's just liberal paranoia, but I don't like the use of taxes to regulate things that aren't explicitly proven to be seriously detrimental to society.
-Jordan Croom

Anonymous said...

Most of the extra taxes we place on goods like alcohol and cigarettes are intended to drive down usage (or at least to moderate it) because they are determined to, for the most part, have some sort of negative effect on the nation. It is certainly true that really fatty foods can have just as detrimental an impact on us; if people don’t have some impetus to regulate their consumption of them, obesity can be the least of their resulting health woes. So it seems logical that, as obesity becomes an ever-increasingly worrisome epidemic in our nation, that a monetary stimulus might be the most effective way (or even one of the only effective ways) to curtail it. With that reasoning, a tax on excessively fatty foods seems logical. To me, it appears like it would be just as effective as the taxes on other such “unhealthy” goods, since a lot of the most popular fatty foods are excessively processed “comfort food”, etc, and just as unnecessary as cigarettes and alcohol (except, of course, to addicts). In that way, I disagree with Jordan’s comments; it doesn’t seem like that much of a stretch when the foods that would be taxed more aren’t what we should probably be eating in the first place and would definitely not be considered the “staple foods” on which a tax would unfairly disadvantage the poor, etc. Still, though, I understand what Jordan is saying about using taxes as “moral coercion”--such a tax could harm society even more (by opening the door to even more taxes on other even less harmful goods) than it would potentially help obesity-prone citizens. Also, as far as Becker’s belief in the “likelihood of future medical advances”--I would like to quote the saying, “An ounce of prevention is worth a pound of cure.” Even if we find more simple methods of correcting obesity, it will probably still be an expensive procedure for the average American; not getting obese in the first place is much more effective, and if we as a society need something to force us to eat more healthily, then maybe a tax is it. We should try to more definitively study obesity and its causes before even considering instituting such a tax, though, I think.

-Nicole

Anonymous said...

http://articles.moneycentral.msn.com/News/KFCOnDietBandwagon%20.aspx?GT1=8618 This is the link where i got this news flash. KFC is going to stop using trans fats in their food. Wendy's is also mentioned in the article for lowering the amount of oil they use in their recipes. "The Cheesecake Factory chain also made news this summer when it announced that it was testing a trans fat-free menu in its Los Angeles stores." My point of all these facts is that we may not need a tax at all. Because the dangers and unhealthiness of trans-fats are becoming more well known and more publicized, demand is decreasing for the products that contain them. In order to keep their patrons, restaurants and fast food chains will switch to healthier oils without the tax. Those that do not will lose money and so it is in the best interests of the firm to make the switch to healthier oils. I think the tax is a needless intervention.
jacob hormes

Anonymous said...

The tax on the fatty foods may become a needless intervention as Jacob said, but one of the reasons people often buy fatty foods to start with is because of the cheap price: if you don't have very much money, potato chips from a vending machine are going to be cheaper than health food at the grocery store, so many people opt for the cheaper (and maybe more tasty) snack. My grandmother even said that she stopped taking vitamins because the prices of them just got too high. A tax on certain fatty foods might actually decrease the consumption of them if the prices are jacked up high enough. -Carrie

Anonymous said...

I think these taxes might work..why not do this so that the country brings in more money. plus if people want to stay fat let them. on the other hand it may force companies and resturants to make there food more healthy if people refuse to buy it. It would be interesting to see if it had an actual impact on the demand for foods like this. Companies would have to switch their ways or perish If it did have an effect then our country would be better off with a lower obsiety rate and all around better looking people.
-Wiles

Anonymous said...

I dont agree with Drews comment of "if people want to stay fat, let them". it seems as if these taxes might be successful, yes, but they do not achieve what it is trying to accomplish. It wont easily solve the problem for obesity either and will only make certain companies lose business. Plus, if people really like the way something tastes, they arent going to mind paying a little bit more to get what they want.
-Veronica

Anonymous said...

I actually think that this tax would be a really good idea. Like Carrie said, most people buy the fatty foods because they are cheap. If the foods weren't so cheap anymore, people wouldn't buy so much of them, and therefore would be eating less fatty foods. Even though there are other causes of obesity, I still think that this could make a huge impact on the number of fat people in the country. Just think... would you go to McDonalds and buy a hamburger and fries if it was more expensive than getting a grilled chicken sandwich? Also, this might make large producers of foods very high in saturated fat, turn their money and resources to something else. Using the same example, McDonalds might see the loss in profits for hamburgers and increase the advertising and money spent on their healthier food options (I know they must have some). This has been shown to work with cigarettes and alcohol so why not give it a try. The food industry is becoming rich based on the fact that people are intaking more and more fatty foods, so now it is time for them to take some responsibility for the health of their customers. There isnt a lot of risk involved because I can't see how this could make things any worse.
-Natalie

Anonymous said...

I disagree with this kind of tax. I do not beleive that this tax should be implemented for the sole fact that the government should not intervine with what their citizens choose to eat. While I understand where this tax is coming from, eating these kinds of foods is a choice that the American people need to make on their own, they do not need "persuasion" by their own government. The health of our nation has become one of the biggest problems presently; and a tax like this would definatley help the health of our people. With that said, I think that this is the wrong approach for making our nation a healthier place. I believe that the people themselves hold the responsibility to change this eating behavior, not just a few folks in Washington. The actual people must realize by themselves that obesity and poor diet is a major problem without this "boost" from the government.

-Nick Wellmon