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Making Calories More Expensive Versus Making Some Calories More Expensive

While I'm on the subject, a number of commenters brought up a fair objection to the RAND study on taxing calories: The authors looked at a proposal to change the price of all calories. But soda taxes and junk food taxes seek to change the relative prices of different calories. As JonWa put it:

If you go to buy a soda tomorrow and all drinks cost 25 cents more most people will probably not drink less soda. But if you go to the store and diet soda/fruit juice is now 25 cents cheaper than regular soda you are more likely to switch.

The idea is not to make bottled drinks slightly pricier it is to make less health drinks more expensive than healthier ones.

That may be true. But I'm pretty skeptical of the government's ability to mount a fine-grained intervention into relative food choices. Fruit juice, for instance, is healthier than Pepsi, but it's not necessarily going to lower obesity rates. Chips are bad for you, but what about baked chips? Do nuts, which are high-calorie foods with lots of positive health impacts, count? How about trail mix? Will we need legislative language defining the appropriate M&M-to-peanut ratio? If soda taxes come first, does that just mean there's a quick uptick in candy bars, as people take their dollar one vending machine over? Do legislative definitions of what makes a sugared cereal simply lead to massive injections of aspartame into Cap'n Crunch?

What's interesting about the RAND study -- and the other studies it mentions -- is that it's actually evaluating an ambitious policy: an increase in the price of calories, full stop. And it's not finding much in the way of impact. I don't think that rules taxes out as a policy initiative worth considering. But it does raise some troubling questions. At the moment, I think obesity is a public policy problem, but I'm not convinced it's one we know how to solve.

By Ezra Klein  |  July 8, 2009; 9:04 AM ET
Categories:  Food  
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Comments

when you go into the world of healthy foods that come in boxes and containers, rather than raw, unpackaged fruits and vegetables, one will spend a fortune.
for instance, two boxes of natural fruit juice pops in my local market are priced at, two boxes for eight dollars!!!!!
eight dollars????????
(make your own)
and ben and jerry's ice cream, made with healthier milk, is now a high-priced delicacy, reserved for special occasions.
the best advice for eating healthy and cheaply, is to eat more fruits and vegetables....and you really dont need compendiums of information and warning labels on them. just dont eat the rhubarb leaves!!!!!

Posted by: jkaren | July 8, 2009 9:44 AM | Report abuse

Do you have any policy solutions that don't include tax hikes? It seems to be your answer for everything. It was nice to see the happless Harry Reid tell Baxcus to stick his taxing health care benifits where the sun doesn't shine.

Posted by: obrier2 | July 8, 2009 9:51 AM | Report abuse

Taxing junk food just seems hopelessly unworkable from a regulatory perspective. Furthermore, one of the messages I took from "In Defense of Food" is that one of the geniuses of processed food is that when one nutrient becomes anathema, processors can just switch it out. I would imagine that the food industry would quickly find ways to skirt the regs and adjunct taxes.

Much simpler is to just make whole (real) food cheaper and more available.

Posted by: JEinATL | July 8, 2009 10:05 AM | Report abuse

Administrability is not some abstract matter, but highly important. After all, whether a Pringle is a potato chip caused a lot of stir in Great Britain.

Posted by: blpanda | July 8, 2009 10:07 AM | Report abuse

Scrolling down to the earlier post, I find a few things wrong with this train of thought.

First, a look at increases with price drops is not a mirror image of decreases with price raises. You can't really expect people who are already fat from eating the cheapest calories to automatically eat more if the calories get even cheaper. Especially if the calories are getting cheaper because people aren't eating more!

Second, you don't need a tax that drives the whole herd. All you need to do is take the profit out of selling fast and crappy food.

For example, put a stiff deposit requirement on drink bottles. Strictly limit the number of fast food and 24-hour mini-marts that can be built. Put a stiff tax on corn syrup.

Fifty years ago we didn't have have bad foods available 24 hours a day, and people wouldn't pay for it anyway- it was too expensive.

Americans got fat by a number of small steps, none of which individually looked that big at the time. The rate of change reported by the RAND researchers doesn't seem too far from the rate of change observed visually in the Puget Sound region. YMMV.

And when you come down to it- like we don't need to raise revenue?

Ironically, the last time I went to Hempfest in Seattle, I found myself in a crowd of 30,000 slim people. If legislators ever get serious about raising revenues and cutting costs, legalizing pot and taxing it will probably have more effect on our waistbands than a sin tax on soda pop. (I know, the actual situation is so different from the pothead-munchie myth that you'll probably need to read the paragraph twice for it to make sense.)

Posted by: serialcatowner | July 8, 2009 10:14 AM | Report abuse

I don't really think taxing soda or candy would have substantial impact on people's choices. People really and truly do like treats, and trying to change their behavior with a tax will be really rather difficult. Further, it's pretty hard to argue that the average fruit juice is all that healthy... it's less awful than soda, but plain water or milk tends to be a better choice for the average adult.

However, a lot of processed foods depend heavily on the subsidies in the Farm Bill. Sugar is a subsidized crop. So is wheat. So is corn. So are soybeans. It is very cost effective to turn these ingredients into very shelf stable, very inexpensive treats that people will buy... no matter how good or bad the economy is. Cutting those subsidies, or diverting some of them to farmers growing fruit and garden truck would dramatically alter the equation for a lot of processed foods.

Posted by: elacartier | July 8, 2009 10:17 AM | Report abuse

I don't see a single magic bullet for dealing with obesity, but I think a lot of things that affect diet and exercise would help a little bit.

Better mass transit - and as Matt Yglesias, Ryan Avent, and others have been going on about, relaxing zoning requirements so more people can live and work within short walks of mass transit - would increase the proportion of transit users, and trips via mass transit generally involve more walking than trips via driving tend to do. And walking is good for you.

That obviously doesn't help *everybody*, but it would certainly increase the number of people who have some form of exercise built into their lives, rather than being something they go to the gym for. You can stop going to the gym because you're squeezed for time, but you're still going to walk the three blocks from the subway to your office.

Another thing that's worth doing is subsidizing growing leafy green vegetables and other particularly healthy produce, and subsidizing outlets (such as farmers' markets) where such produce forms a substantial fraction of sales.

Because, let's face it, things like tomatoes and bell peppers and whatnot have gotten EXPENSIVE relative to other foods. It's really hard to justify spending $2 or $3 on a medium-sized tomato, when you can buy ground beef at $2/pound. I don't know how much the relative prices of produce versus other foods affect other people's grocery shopping, but it sure affects mine. Thirty years ago, when I was a lot poorer than I am now, I didn't hesitate to stock up on produce that I might or might not use, because it was CHEAPER than other foods. Now it's not, and that can't be good for us.

That's a couple of ideas, anyway. Sorry about the rambling.

Posted by: rt42 | July 8, 2009 10:17 AM | Report abuse

as jkaren pointed out, this is very simple. All the govt has to do is tax foods that are processed, and possibly for each stage of processing. Raw fruits and veggies and cuts of meat are not processed. Nuts, seeds, berries, and raw grains, legumes, etc are not processed. Juices, not juice cocktails, are not processed

Pretty much everything else is processed.

Posted by: witty_al | July 8, 2009 10:17 AM | Report abuse

Economic choices occur all across the food production chain.

Farmers plant what is profitable - quite often because of subsidies (including water subsidies), price supports, and demand that is artificially created. Remove those supports on those things that have negative outcomes and bad choices diminish.

Bulk suppliers bend with transportation subsidies, credit availability, and final demand. Remove negative choices from preference.

Final producers buy ingredients that are good economic choices - unless consumers are rebelling against some types of ingredients. Example: Transfats. Even breads now claim 'no transfats' because consumers don't want it.

But final taxation also can have a role. There seems little doubt that higher taxes on tobacco have decreased consumption. But this axe should be rarely used, because it works only if the population has been educated to view the item as harmful. It wasn't necessary to tax foods containing transfat because the people flat out didn't want it after medicine firmly said it was very bad.

Social engineering through information that is reliable is far better than taxation, and we should never tax stuff that we don't have good evidence against and which hasn't been villified through dispersal of information first. But if taxes must be used to remove stuff from the markets for food, then the bottom of the chain is far preferable than the final purchase point. And start with removal of subsidies, hidden or overt, first.

Posted by: JimPortlandOR | July 8, 2009 10:20 AM | Report abuse

As to the government making choices about which calories are better, you might look to the WIC program. There are definite restrictions about what you can buy, but are health outcomes any better? vs say food stamps, which makes no distinction between types of subsidized calories.

We have plentiful examples of better health care systems from other countries. Are there examples of ag/food systems beyond our borders better than ours?

Posted by: Hazelite | July 8, 2009 10:26 AM | Report abuse

The problem with your approach is that, believe it or not, *all* calories make you fat. Eating fruit instead of chips might reduce your cancer risk, but it won't reduce obesity unless it also leads to lower calorie consumption. See, for instance:

http://content.nejm.org/cgi/content/full/360/9/859

Cutler, Glaeser, and Shapiro argue convincingly that much of the recent increase in obesity can be traced to a reduction in food preparation time:

http://faculty.chicagobooth.edu/jesse.shapiro/research/obesity.pdf

So you could tax based on preparation time or pre-processing if you want. But, frankly, I'm not convinced you can devise a simple system much better than simply taxing calories.

(Speaking of which, I suspect the reason the RAND study found no effect is that food is so cheap for most Americans that it would take a huge and prolonged calorie tax to accomplish anything.)

Posted by: davestickler | July 8, 2009 10:28 AM | Report abuse

Have cigarette taxes reduced smoking or made poor people poorer?

Has the cost of installing telescreens in everyone's bedroom been factored into the CBO projections for healthcare reform?

Posted by: fallsmeadjc | July 8, 2009 10:35 AM | Report abuse

Ok, the last part of my post there sounded really silly after you posted the exact same argument in a few earlier posts.

Note to self: Read all of Ezra's posts before commenting. D'oh!

Posted by: davestickler | July 8, 2009 10:38 AM | Report abuse

Wow. Stop taxing!!!!
The government needs no more money. Seriously
People make bad decisions and it's not up to the government to take care of every bad decision everyone makes.
Get the government out of my pantry!

Posted by: atlmom1234 | July 8, 2009 10:42 AM | Report abuse

Yes, fallsmeadjc, increased taxes on cigarettes have decreased rates of smoking. The highest burden of such taxes are on low income communities.

It one of the strongest arguments against a tax on food - even its unhealthy. So-called sin taxes impact the poor - who have less discretionary income. In particular, the poor spend more of their income on food than higher income communities.

The problem with any of the solutions referenced above - particularly improving subsidies to support more leafy items - is where are you going to sell them? Food deserts are the rule, not the exception - and improved mass transport cannot make up for a lack of grocery stores in your neighborhood or entire city.

The research shows grocery stores or ACCESS makes the difference--thats the policy solution. Chicago and Philly have invested funds to reduce food deserts, improve access to healthy foods, and in turn, improve health outcomes.

Posted by: k8us | July 8, 2009 10:51 AM | Report abuse

"eating fruits instead of chips, may reduce your cancer risk, but it wont reduce obesity, unless it also leads to lower calorie consumption"

i looked at the study you linked to, and it was interesting.
but, regarding calorie consumption and growing obese on fruits and vegetables, it is hard to binge on cauliflower, sweet potatoes and apples!
did you every try binging on cauliflower?
also, fruit sugars are processed differently...and i dont think they cause the same excessive cravings as one experiences with processed foods and artificial sweeteners, which the body doesnt recognize as a "living" foodstuff.

Posted by: jkaren | July 8, 2009 11:06 AM | Report abuse

Are you saying we need a public option for food? If the Government could just use their buying power to supply cheap healthy food to the poor then everything would be great! They could save money by not having to worry about profits and advertising and everything would just be super super great! I bet you could get 72% of Americans to support cheap healthy food from the Government depending upon how you asked the question. It's a slam dunk. If only those cowardly politicians had the courage to make it happen.

Posted by: fallsmeadjc | July 8, 2009 11:12 AM | Report abuse

Just to followup on k8us's response on tobacco taxes decreasing consumption, the estimate from 2004 or so was a price elasticity of about .5. For example, in France when cigarette taxes went up 40%, consumption declined 20%. We should be able to get new US estimates due to the first increase in Federal excise taxes on cigarettes since the 1980s.

As for policy, I suggest we look to other countries. In the US, the government is currently in our pantries by being in our farms - subsidizing cheap meats and grains. I understand European countries, for example, are moving toward subsizing farmers without specific quotas for production. This would relatively increase incentives to grow produce and the like. It may also reduce the distortions that favor quantity over quality, given that the current subsidies are based on quantity produced. Or, as mentioned above, we could subsidize produce specifically. Or we could just subsidize "traditional agriculture", focusing on products from long before industrial food.

To the extent we'd want to favor specific production, we'd ideally provide subsidies at the final consumer level for raw product (e.g. whole corn, produce, etc.) to avoid corn parts or soy parts from being subsidized and then used in processed goods. It'd also make our food cheaper, increasing consumer surplus. Lastly, if consumers didn't like something (be it an entire food type or a specific bushel of a food that's not grown for quality), it would not receive a subsidy. This would encourage growing things people want (like fruit that actually has taste), something we've lost with the current subsidy program.

As for other items, such as ready-made meals and societal habits, they're temporarily and would follow. In Paris, we now see very good steamed vegetables, lean meats and the like that are available frozen or in fast-food style places. I don't see too much of that in Washington, DC.

Posted by: GrandArch | July 8, 2009 11:27 AM | Report abuse

Let's be fair, here, and acknowledge that no one gave a rat's ass about the ill effects of high calorie foods until the election and the unbridled spending of this administration and it's complicit Congress.

This is just a way to justify taxing your food. You have money, and they want it.

Posted by: WrongfulDeath | July 8, 2009 11:58 AM | Report abuse

Let's be fair, here. No one gave a rat's ass about the health issues of high calorie foods until after the election and the unbridled spending of this administration and it's complicit Congress.

It's just another excuse to tax food. You have money and they want it.

Posted by: WrongfulDeath | July 8, 2009 12:00 PM | Report abuse

Come on, Ezra...I'm your biggest fan, but I would expect you to know how to properly read scientific studies (especially based on your careful readings of past studies). These studies are only applicable to the paradigm being tested. You can't conduct an experiment that shows one specific point about a particular form of taxation and use that to generalize to all forms of taxing calories. And this study tests the effects of a reduction, not an increase in prices. It is conceivable (and even likely, given this study) that the portion of consumers' demand curves moving down along the y-axis from current prices is relatively inelastic, hence the only slight increase in consumption as prices decrease; this doesn't mean, though, that the portion of the demand curve above current prices is equally inelastic. That is, it's entirely possible that the reverse study (seeing the effects of price increases) would show that people generally are sensitive to these increases and reduce caloric intake.

In the end, I agree with your assessment that calorie labeling is a better idea (I'm a fan of "libertarian paternalism"), but the evidence you give against taxation is remarkably weak.

Posted by: commenter1 | July 8, 2009 12:29 PM | Report abuse

the us has a long history of sin taxes

people who use tobacco and liquor have long paid for the privilge

putting "obesity" on the list of sin taxes takes the concept to a new place

it is far easier for politicians to tax something that has sufficient disapproval than to deal with a problem directly

but i don't think coca-cola, pepsi et all are going to become tax collectors without a big fight

Posted by: jamesoneill | July 8, 2009 12:40 PM | Report abuse

As several commenters have pointed out, rather than a calorie tax, the more direct option is to remove the existing subsidies for corn, etc.

elacartier said it already...There is a lot of incentive on the part of food producers to convert the crops that we heavily subsidize into shelf stable products. Rather than taxing anything at the end stage, stop or change the subisdy structure we currently have that create our rather problematic food system.

In response to a few of the comments:

1) jkaren @ 9:44 - While I am sympathetic to your point of view, sadly it is not cheaper in this country to eat fruits and vegetables. We are one of the few countries in the world where the poor are obese. $5 at McDonalds or Taco Bell gets you a lot more calories than it will buy in terms of fresh produce at the grocery store. They clearly aren't good calories, but when you're hungry that's not a huge concern...

2) atlmom1234 @ 10:42 - The government currently IS in your pantry. They are subsidizing certain crops which dictates what options are available in the marketplace. Given that it is in the national interest not to rely entirely on foreign sources for our food supply, and also that I think most people believe that food should be affordable, it is unlikely that Government will not be involved in subsidizing farming in the US. The real question is what incentives should the government be creating for farmers, food produces, and consumers.

3) davestickler @ 10:38 - The NEJM article you cited looked at varying the balance of fat, protein, and carbohydrates, but the different options were all relatively healthy options. In particular, "carbohydrate-rich foods with a low glycemic index were recommended in each diet." So, this is not comparing junk/pre-processed foods to whole foods. I apologize for not having a reference for the following, but there is definite evidence that highly processed sugars, especially fructose, are harder to break down which over time eventually wears down the bodies insulin production mechanism which is what results in diabetes. So, simply put, all calories are not equal.

Posted by: AnonymousInMA | July 8, 2009 12:56 PM | Report abuse

anonymous in ma

i dont really know why you say that fast food eating is cheaper.
i took three children to a mcdonalds, two days ago, and for an order of fries, a milkshake and a big mac...and a small order of chicken mcnuggets, it came to ten dollars.
and they were still hungry when we got home.

honestly, you can eat fruits, vegetables, different kinds of beans, yams and potatoes rice and other grains and make soups and it is very economical...filling and healthy.

there are groceries where you can get huge bags of oranges, carrots, potatoes, apples,slightly over- ripe fruit on sale, yams, lettuce and seasonal abundant fruits in quantity at great prices.
bags of rice, inexpensive pasta to use with your vegetables, lots of varieties of beans, and of course...bunches of bananas.
you can eat very healthy for little money.
of course, if you are going to buy tomatoes, avocados and specialty lettuces and boutique-fruits, it will be costly, but that is the case with everything.


it doesnt have to be expensive to eat healthy with fruits, vegetables, beans and rice.
but without discipline and making a radical change in eating choices and behaviors, of course, it is easier to resort back to fast food.

Posted by: jkaren | July 8, 2009 2:21 PM | Report abuse

and....
in most parts of the country, you can get a tomato plant....the gift that keeps on giving.
and there is canning and preserving.
it all take effort.
but it is a choice.

Posted by: jkaren | July 8, 2009 2:26 PM | Report abuse

As long as the tax makes junk food calories more expensive, I am okay with it. The tax should be in relation to the calories in the product.

say a candy bar with 200,000 calories (200 kcalories) would be taxed at $0.000001 per calorie or an extra 20 cents.

My diet coke with 0 calories would add $0 to the cost.

Posted by: sailor0245 | July 8, 2009 6:46 PM | Report abuse

1) AnonymousInMA -- Hey, I'm in MA too!

You're right that different kinds of foods have different health impacts. That's why some foods are considered healthier than others. And it extends to diabetes, cancer, heart disease, and others; the public health impact of poor diet is not small. If your measurement is purely obesity, though, it all comes down to calories.

2) jkaren -- It might be harder to binge on cauliflower. But that might just lead to consumption of more meals, for instance; it's not clear to me that structuring a diet to include certain kinds of foods would affect overall calorie consumption, unless the impact it had on preparation time raised the opportunity cost of eating.

3) The smoking tax parallel is an interesting one. Cigarette taxes actually make smokers happier:

http://ideas.repec.org/p/nbr/nberwo/8872.html

This is presumably because smokers seek to quit but have self-control issues. In fact, many people may seek to diet or eat healthier foods as well, but struggle to live up to the behaviors they intend to choose. I think that's at least a mildly compelling argument for why a tax on junk food would be socially beneficial!

Posted by: davestickler | July 8, 2009 7:58 PM | Report abuse

Mr. Klein-- Your article is excellent and brings up many important aspects of taxing food/beverages.
As a nutrition educator at UC Davis and consultant to food and beverage companies, I don’t believe that taxing specific foods, beverages, and/or ingredients will not solve the obesity epidemic or prevent any other health condition. Obesity and most health issues do not have a single cause - it's a combination of several complex factors. Thus no one beverage is to blame and taxing soda is grossly off the mark as a means to fund our health care system as well as making a measurable “dent” in our country’s obesity woes. Here are a few statistics for clarification:

• Obesity rates in Arkansas and West Virginia are among the nation’s highest, yet these are the only two states that currently have a tax on soft drinks.

• A federal tax on sugary beverages would raise perhaps $50 billion over 10 years, or about 3% of the $1.5 trillion needed to pay for health care reform. By comparison, limiting the tax exemption for medical insurance benefits could bring in $500 billion, and making Medicare and Medicaid more efficient could save as much as $600 billion.

• Without a tax soft drink sales fell in 2008 for the fourth straight year, as increasing numbers of health-conscious consumers switched to bottled water.

Liz Applegate, Ph.D.
University of California, Davis

Posted by: DrApplegate | July 9, 2009 4:15 PM | Report abuse

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