New York City Mayor Michael Bloomberg and Gov. David Paterson have asked the U.S. Department of Agriculture to bar New York City food-stamp recipients from using this benefit to purchase sugary drinks. The undeniably laudable goal of this request is to reduce obesity.
That increased soda consumption causes obesity and that people at the lower end of the socioeconomic spectrum consume disproportionately more soda is disputed by few. The Wall Street Journal recently noted that nearly 40 percent of city public school students in kindergarten through eighth grade are either overweight or obese.
In pushing the request for a ban, Bloomberg’s office has argued that relative to a child who consumes no sugary drinks, a child who consumes one sugary drink a day has a 60 percent greater risk of obesity. More generally, the New York City and state health commissioners, Thomas Farley and Richard Daines, have argued in the New York Times that 57 percent of adults in New York City are either overweight or obese and that it costs the state nearly $8 billion a year to treat obesity-related illnesses.
Simply put, the problems of rising soda consumption and obesity are real. That said, how ought we tackle these problems? Economics suggests two possible approaches: one modern, the other more traditional. The modern approach is inspired by recent advances in behavioral economics. Policymakers who like behavioral solutions are typically in favor of dealing with increased soda consumption and obesity by providing consumers with more information. For instance, with regard to the Bloomberg/Paterson request, George Hacker, senior policy adviser at the Center for Science in the Public Interest, said that a more equitable approach would be to use educational campaigns to discourage food-stamp users from purchasing sugary drinks. Like-minded individuals would want food products to be calorie-labeled and also would require restaurants to post information about the caloric content of their offerings.
Such behavioral solutions may work in the long run, but there is little evidence to suggest that they can address problems like obesity in the short run. As far as soda consumption is concerned, insufficient information is hardly the problem. The real problem is that sodas cost too little because the price of high fructose corn syrup is artificially low as a result of extant corn subsidies. This phenomenon is more general. The price of unhealthy processed foods has been falling over time and this-more than informational problems-is responsible for the rise of obesity.
The traditional approach asks policymakers to recognize that consumers respond to price signals. Instead of doing what is politically safe, we need to summon the courage to levy taxes on and thereby raise the price of sugar-sweetened drinks. A key problem here is that because we lack the political will to increase the price of junk food in general, we attempt instead to alter consumer behavior through more circuitous and less tested means.
If we lack the political courage to take on the American Beverage Association, then we should at least recognize that the Bloomberg/Paterson request has merit.
Batabyal is the Arthur J. Gosnell professor of economics at the Rochester Institute of Technology, but these views are his own.
10/22/10 (c) 2010 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail email@example.com.