Wednesday, March 28, 2007

Forget the fat tax...

One response to the obesity problem in the US is the suggestion to tax unhealthy food, thus steering consumers to better choices.

Popularly known as the "fat tax" or the "Twinkie tax," the concept first gained widespread attention in 1994 when Yale University psychology professor Kelly D. Brownell outlined the idea in an op-ed piece in The New York Times.

Addressing what he called a "dire set of circumstances," Brownell proposed two food-tax options: A big tax, in the range of 7 percent to 10 percent, to discourage the purchase of unhealthy processed foods while subsidizing healthier choices; or a much smaller tax to fund long-term public health nutrition programs. [

It sounds reasonable, but likely won't work as well as it might seem.
Americans have been getting fatter since at least the mid 1980s. To better understand this public health problem, much attention has been devoted to determining the underlying cause of increasing body weights in the U.S. We
examine the role of relative food prices in determining an individual's body
mass index, arguing that as healthful foods become more expensive relative to
unhealthful foods, individuals substitute to a less healthful diet. Using data
from the National Health Interview Survey (NHIS) for the period 1982-1996, we
find that individual BMI measures, as well as the likelihood of being overweight
or obese, exhibit a statistically significant positive correlation with the
prices of healthful relative to unhealthful foods. These results are robust to
endogenizing the relative price measure. While the magnitudes of our estimates suggest that relative price changes can only explain about 1 percent of the
growth in BMI and the incidence of being overweight or obese over this period,
they do provide some measure of how effective fat taxes would be in controlling the obesity epidemic. Our estimates imply, for example, that a 100 percent tax
on unhealthful foods could reduce average BMI by about 1 percent, and the same tax could reduce the incidence of being overweight and the incidence of obesity
by 2 percent and 1 percent respectively.
[Full report]

It is the level of effect that matters in such economic speculation. Sure, higher prices have an effect, but at the level indicated above, not much.

I'm not sure how we can push people to better health habits. I think ending first dollar health plans is one way - and we seem to be moving toward that.

But the single best "pull" might be the heightened appreciation for good food. As a rule, home prepared meals offer better nutition and especially portion control.

Bring home cooking back!

[via Metafilter]

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