Taxing obesity?
By: Samantha Weinberg and Ryan Santana.
Edited by: Janaki Patel.
Many countries around the world have been trying to tackle the issue of obesity in new and creative ways. One such tactic has been to levy a tax on unhealthy foods so that they are less desirable for consumers. This was implemented in Denmark by the government so that 16 kroner (2.7USD) per kilogram of saturated fats in a product was added to costs. This led to an increase in costs for the producers of these goods and higher overall administrative costs in their attempts to adjust prices accordingly. Unfortunately, this “fat tax” did not have the desired results since it did not deter consumers from purchasing the unhealthy foods. In some cases, people actually crossed the Danish border to get their sweets from countries where it was cheaper without the tax.
The Danish government has announced plans to repeal the tax in light of its failure and has halted works on a sugar tax that was being considered. This failure calls into question what the government can actually do to encourage consumers to make healthy choices. In New York, and some other states, mandates have forced calorie information to be displayed in all restaurants so consumers can at least make more informed decisions. This method does not seem to be making much of a difference either. New York has also been one of the first states to place a ban on super-sized sodas. European countries have also tried to develop new ways to control the problem. One example is Hungary’s higher tariffs on soda and alcohol so the goods are more expensive on the local market.
With obesity becoming a growing problem in the United States and other developed countries the ability to curb this is seen as essential for governments. In light of Denmark’s failed attempt, other governments are questioning their tentative plans to implement similar programs. At some point government will need to decide how much of peoples’ decisions they can actually influence and also decide if it is worth the risk of potentially neglecting other important parts of the economy. The government will also have to ask itself whether it is realistic to control the problem of obesity. At the same time people must also take responsibility for the way they treat their body. There may be ways a government can attempt to deter the option for people to eat junk food but, like in the article stated, there are ways for people to ultimately get what they want.
The next step, as economists, is to try and think of ways that we can influence people’s choices without interfering with the direct interaction between consumers and producers in a negative way that leaves all parties worse off. Although education on nutrition is better than ever before we could probably look into putting more energy and resources in the education of nutrition rather than possibly hurting the market. Educating kids on nutrition at schools and raising awareness about junk food can be a better solution. And while we’re at it we should also inform people about the dangers of non-organic and processed foods. If people know exactly what they are eating then people can make much more informed choices as compared to simply looking at a calorie count on a menu.
Discussion (5) | November 18th, 2012 Categories: Government Policy
