Is America Ready for a Fat Tax?

July 6th, 2009 at 6:17 pm by Tim Mak | 12 Comments |

Should junk food and soft drinks be taxed like cigarettes and alcohol? A new study sheds light on whether the so-called “fat tax” would actually leading to a national shedding of pounds — and a healthier health care system.

Obesity is one of the biggest societal problems of our generation: One-sixth of the adults in the world, and one-third of Americans, are obese, putting them at greater risk for a slew of chronic illnesses–from type-2 diabetes to cardiovascular diseases, to cancer. But some conservatives have come out sternly against the concept of a fat tax, with Rush Limbaugh railing against it as “discrimination against the fat.”

Meanwhile, the cost of health care will increase by 20% over the next decade as a result of the obesity epidemic. Those who favor the fat tax argue that taxpayers should not have to pay for the bad eating choices of others, and that taxing junk food or calories will be able to offset some of the public costs of obesity. In other words, the perverse incentives of the American health care system currently shifts the personal costs of unhealthy decisions onto the healthy, and a fat tax could properly realign those incentives.

But according to a new study of the problem, a fat tax would not necessarily give the American economy–and our overweight populace–the diet it sorely needs. The study, conducted by the National Bureau of Economic Research (NBER), concluded that taxes on calories may work – but not with any sort of efficiency or rapidity. In fact, the health economists who conducted the report conclude that even a massive 10% increase in the price of a calorie of junk food would only have the potential of reducing average BMI (Body Mass Index, or a measure of body fat based on height and weight) by 1.2 units over twenty years. By comparison, the average American’s BMI increased by 2.7 units from 1980 to 2000. The study’s authors shrewdly note that benefits will “likely post-date the decision-making horizon of an elected official,” and that public policy analysts “will not find a ‘fat tax’ to be a quickly effective solution.”

A fat tax may be the politically faddish diet of the moment, but policy innovators are goin to have to work a lot harder to take the weight off.

12 responses so far

1 mlindroo // Jul 7, 2009 at 9:22 am

When searching for root causes (or is it merely the effect of satisfying the preferences of an extremely obese customer base?), it is difficult to overlook the grotesque servings and portion sizes offered by certain fast food vendors. The “Monster Thickburger” sold by Hardee’s (proud motto: ‘not a hamburger for tree-huggers’) contains 1410 kcal while Cold Stone Creamery sells a “PM&C” 2010kcal chocolate icecream/peanut butter milkshake. Insane….
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I know it’s just a small step, but it might be nice if at least those mega-size portions were outlawed. If you need it, by all means order two 700kcal “Monster Thinburgers” instead. But I suspect many consumers would eat less candy, potato chips etc. if the bags/portions were smaller.
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Another nice idea would be to force fast food restaurants to offer healthy alternatives. McDonald’s are already fairly good at it since they offer salads, carrots, fruit bags etc. for kids. And an ordinary Big Mac meal isn’t that bad from a nutritional point of view.

MARCU$
2 barker13 // Jul 7, 2009 at 10:00 am

“…it might be nice if at least those mega-size portions were outlawed.”

And folks wonder why I insist America is doomed…??? Marcus – one of the more “reasonable” and certainly most civil of the libs – wants to outlaw large portion sizes.

I have a better idea – why not make “phys-ed” (aka “gym”) what it SHOULD be K-12! If we’re gonna work on the “command” principle, I say we “command” our schools to get our kids in shape.

Marcus. With respect… (*SIGH*)… your suggestion is SERIOUSLY unAmerican.

BILL
3 Tim Mak // Jul 7, 2009 at 10:14 am

I think it would be reasonable to say that some of the poorer segments of society rely on these huge portions for their daily meals. On the other hand, those who are better off are making a CHOICE to eat foods – people, by now, understand that the thickburger is not the healthiest option. If they wish to eat something like that and it gives them pleasure to do so, I am not the least bit inclined to get government in their way.

And to force fast food restaurants to offer healthy alternatives puts us on the road down to unintended consequences – McDonald’s salads, for example, are more fattening than a a big mac when you put cheese and dressing on.

Why force fast food restaurants to do anything? If people want to lose weight (and surely there are society pressures to do so), they will stop eating junk food.
4 Oneon1isto // Jul 7, 2009 at 2:54 pm

I’d hate to be that guy in that picture. Hope he’s not a regular NM reader.

At Bill: we outlaw crap all the time. Is the ban on cocaine distinctly un-American to you as well?

At Tim: there are really sweet urban planning studies done on low-income neighborhoods with little-to-no access to legit grocery stores. The alternative? McDs.
5 barker13 // Jul 7, 2009 at 3:38 pm

Geoff,

You really wanna stick with that… er… analogy…???

(*SHRUG*)

No. Banning cocaine use is not un-American. Banning half pound restaurant burgers would be.

BILL
6 Oneon1isto // Jul 7, 2009 at 4:05 pm

I’ll give, poor example. But I stand by my original point: we sin-tax and ban things that are bad for our health all the time. It can pain my poor libertarian soul, but we do this all the time and often for the greater good.

I recall a similar uproar over trans fats bans sprouting up. God, save us from that regulation.

And I get it. I do. Here’s you on that elections post: “What “reforms” are going to create an educated, active, civic minded, ethical, informed, logical electorate…??? Hmm…???” Your point is well taken. We can’t over-regulate or nanny-state our way to a perfect world or a perfect electorate.

But we did pretty effectively remove lead from people’s lives. And we’ve banned certain plastics that seep into your foods. And we ban pesticides. Prescription meds are selectively applied mini-bans. We ban certain additives. And diseased animals. The list goes on…

Heart disease is a (the, correct?) leading cause of death in the US. Obesity is an epidemic. Health care has spiraling costs. It’s not fear-mongering, nor un-American, nor anything but pragmatic theory to put the three together and come up with a solution.

But yeah. Back to your point. Cocaine was a little off.
7 Oneon1isto // Jul 7, 2009 at 4:09 pm

Oh, and this is Geoff. I switched back to my nickname.
8 barker13 // Jul 7, 2009 at 4:28 pm

“I’ll give, poor example.”

(*SMILE*) Fair enough, Geoff. (*WINK*)

“But we did pretty effectively remove lead from people’s lives.”

Yeah… the same idealists also banned DDT and millions have died because of it.

Remember MTBE? (*SNORT*)

Oh, yeah… leave the frigg’n PCBs buried and stop screwing around with old asbestos.

Geoff… this recap of recent environmental regulation aside… we’re talking cheeseburgers, etc., not poisons. Yes, it’s un-American (IMHO) to tell restaurants they can’t offer all you can eat buffets.

(*SHRUG*)

I gave you the solution. Nip obesity in the bud. When it comes to minors the state has powers it doesn’t – and shouldn’t – possess in terms of dealing with adults. I say use these powers.

As to obesity as it effects healthcare costs, I’m all for using actuarial data properly in insurance pricing. That’s the way you tackle obesity – by targeting those who abuse their freedoms, not by taking my freedoms away from me.

BILL
9 sinz54 // Jul 7, 2009 at 8:32 pm

I propose that health insurance offer the same kinds of behavioral incentives and disincentives that life insurance and auto insurance offer.

Term life insurance offers two different premiums: A lower one for non-smokers and a higher one for smokers.

Auto insurance premiums are based on a formula that takes into account driving history, whether antitheft devices are installed on the car, etc. A safer driver may qualify for a lower premium.

I suggest doing the same thing with health insurance: Someone who is more than 20% overweight should have to pay a surcharge on their health insurance premium. Very simple.

This avoids discriminating against people’s lifestyles, and lets them make whatever choices are necessary to stay healthy within their chosen lifestyle. Someone who leads an active lifestyle (marathon runner, say) should be able to eat Big Macs without gaining weight. Someone who leads a sedentary lifestyle may need to cut out the fatty foods in order to keep from becoming overweight.
10 corruptmemory // Jul 8, 2009 at 12:14 pm

The question is where do you stop. What is considered “junk food”? I can eat steak and pork chops every night and be just as fat as the guy who eats cotton candy and doritos all day. And I’d probably be less healthy…
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