Fat taxes (18 October 2006)

Everybody's getting in on banning trans fats: New York City, Chicago, Disney, Pepsi, Wendy's. But why impose a ban when you could generate some revenue with a tax?

On his and fellow conservative Richard Posner's blog, (which is totally bizarre from a rhetorical point of view; it seems as though it were written by Spock), Gary Becker, an economist famous for treating human beings as a commodity (human capital), and performing economic analyses on drug addiction (it's rational) and domestic life (it's a factory), mulled over the implications of a tax on fat, which would be a less paternalistic way of ridding the world of trans fats (a.k.a. hyrdogenated oils) that clog arteries and cause obesity. (Some health officials go so far to compare hydrogenated oils to the threat posed by lead paint, but I think I'd feel substantially more comfortable with children eating doughnuts than paint chips.)

Becker is skeptical that the danger outweighs the social pleasure afforded by hamburger sandwiches and french-fried potatoes, and suspects that obesity is more attributable to kids' propensity for such "sedentary activities" as "listening to music on iPods and other devices." Kids spend too much time in front of computers, he suggests, and we wouldn't want to start imposing Pigovian taxes on Internet usage, would we? This seems like a red herring to me -- to find something more appealing to substitute for fat in order to make the argument against social engineering through taxes seem more salient. The same goes for when Becker, evoking the idea that obese citizens may stress the publicly financed health care system and should therefore be taxed to compensate for that (a la one of the rationales for cigarette taxes), shifts the subject to health-care savings accounts and consumer-driven health care, the preferred conservative nostrums for America's health care crisis.

Posner, in his reply to Becker, seems more cogent on the subject. He raises the point that obesity is correlated with poverty, so a fat tax would likely be regressive and would possibly fail to achieve its intended effect.

Indeed, high-caloric "junk food" might conceivably though improbably turn out to be the first real-world example of a "Giffen good," a good the demand for which rises when the price rises because the income effect dominates the substitution effect. A heavy tax on high-caloric food might so reduce the disposable income of the poor that they substituted such food for healthful food, since fatty foods tend to be very cheap and satisfying, and often nutritious as well.

But his main contention is that the rationale for a fat tax relies on the belief that people who eat fatty food are making informed rational choices and revelaing a preference for Ho-Hos and Doritos over broccoli. Posner, somewhat surprisingly, is willing to throw rational choice out the window here:

I don't think the fact that obesity is correlated with poverty is due entirely to the fact that fatty foods tend to be cheap as well as tasty and satisfying. I suspect that many of the people who become obese as a result of what they eat do not understand how, for example, something as innocuous as a soft drink can produce obesity. I also suspect that producers of soft drinks and other fatty foods are ingenious in setting biological traps -- designing foods that trigger intense pleasure reactions caused by brain structures formed in our ancestral environment (the prehistoric environment in which human beings attained approximately their current biological structure), when a taste for fatty foods had significant survival value.

Because of these biological traps, and the imperviousness of poor neighborhoods to nutrition education, Posner is willing to consider a ban of deceptively innocuous products like soft drinks: "And while generally parents know better than government what is good for their children, many parents who permit their children to drink soft drinks do not."

As much as I don't think the government should be telling people what they can and can't eat, it's hard to see the harm in disincentivizing food that makes for fat children. But the problem seems larger than the junk-food industry, which arises in response to generalized time crunch and the devaluation of time spent sharing a meal. I don't think the poor are necessarily ignorant about the ill effects of junk food, but they don't have the time to put into policing these questions or pursuing the frequently labor-intensive alternatives. We have developed a food infrastructure premised on the idea of delivering filling calories quickly to serve the need for convenience rather than nutrition. What may be needed is a proposal that could provide incentives for convenience, which is almost impossible to imagine, seeing how convenience virtually has become the definition of incentive.