June 18, 2012
Bloomberg, Sugar, and Obesity
Bloomberg, Sugar, and Obesity—Posner
I agree with Becker that one must be hesitant to recommend governmental intervention in personal choice. Government lacks good information about consumer preferences in a country as vast and diverse as the United States, and government is buffetted by interest groups. But the case for some government intervention in the obesity epidemic (and it is an epidemic—obesity begets obesity, as I'll suggest) seems to me compelling.
I am not particularly interested in saving the obese from themselves. I am concerned about the negative externalities of obesity—the costs that the obese impose on others. Some of the others are the purchasers of health insurance and the taxpayers who pay for Medicaid and Medicare and social security disability benefits. Though the obese die on average earlier than the non-obese, which reduces their average health costs somewhat, the reduction is more than offset by the higher health costs that they incur (and by incurring impose, to a considerable extent, on others) because of the effect of obesity on chronic health conditions such as diabetes, heart disease, and joint problems, on mobility generally, and, because of these conditions, on ability to work (and hence on social security disability costs) and on employability (and hence on unemployment insurance costs). Obesity kills, but slowly, and en route to dying the obese run up heavy bills that, to a great extent, others pay.
Even more serious are the harmful effects of obesity, and of the food habits that contribute to it, on children. Obesity is sometimes a consequence of genetic factors but more often of gluttony, eating the wrong foods, eating between meals, drinking large quantities of sugared soft drinks (the straightest path to obesity), failing to exercise or even to move around, lack of self-discipline. These qualities "nourish" obesity and are in turn nourished by it, in a vicious cycle. Children who grow up in a household of obese parents (often there is just one parent, and she is obese) very often acquire the same bad habits.
One might think that since most parents are altruistic toward their children, parents would strive to prevent their children from acquiring their bad habits. But if they don't know how to avoid becoming obese themselves, it is unlikely that they know how to prevent their children from becoming obese.
Then too, the more people in one's family or circle of friends or coworkers who are obese, the more obesity seems normal. This is an implication of the fact that homo sapiens is a social animal. We want to blend in with our social peers. The more obese people there are, the likelier they are to think thin people scrawny, unattractive, even unhealthy. (That is why I called obesity an epidemic—it's contagious, though as a result of social factors rather than of pathogens.) What lends impetus to New York Mayor Michael Bloomberg's proposal to limit the size of containers in which sugared beverages may be sold is that two-thirds of the population of the Bronx is overweight and almost one-third is obese. There must be communities in the Bronx in which a majority of adults are obese. It must be very difficult for children growing up in such communities to avoid becoming obese themselves.
Bloomberg's proposal is widely criticized, not only on the shallow ground that it interferes with freedom of choice, but on the more substantial ground that it can't have much effect, since the same sugared drinks can be sold in smaller containers. But this misses two important points. The first is that the only reason for selling a product in different-size containers is that there are consumer preferences for the different container sizes; for it would be cheaper to sell all one's product in identical containers. This suggests that if the sale of sugared drinks in big containers is forbidden, there will be at least a slight drop in the purchase of those drinks and hence in their consumption; there will not be perfect substitution of smaller containers; and this could be significant because sugared soft drinks are as I said the straightest path to obesity.
More important is the symbolic significance of Bloomberg's proposal (if it is adopted and enforced). It is an attention getter! It tells New Yorkers that obesity is a social problem warranting government intervention, and not just a personal choice.
Think of the history of cigarette regulation. That smoking is unhealthful was discovered early on. (Oddly enough, the pioneers in discovering the link between smoking and lung cancer were doctors in Nazi Germany, and the Nazi government actually campaigned to discourage smoking.) But the initial steps to discourage it in this country were tepid—polite warning labels on cigarettes. Later, warnings were required in ads as well. Then the warnings in both labels and ads became scarier. Cigarette companies were sued for concealing the dangers of smoking. Zoning ordinances imposed increasingly tight restrictions on where one could smoke. The federal government banned smoking in federal buildings. Cigarette smoking fell, from an average of 40 percent of the adult population in the 1970s to 19 percent today. There is some grumbling about this massive governmental intrusion into consumer choice, but very little. I certainly am not grumbling about it.
If there is to be a parallel movement to reduce obesity, it has to start somewhere. Maybe it will start with Bloomberg's container proposal—an attention getter. Maybe it will grow. Maybe someday it will be as effective, and receive as much public approbation, as the anti-smoking movement.
Controls Over consumer Choices- Becker
New York Mayor Michael Bloomberg's proposal to ban sugary drinks larger than 16 ounces from restaurants, street carts, movie theatres, and stadiums would seem to be a joke for hosts of late night shows were he not completely serious. Although the proposal makes little sense, and could even increase the consumption of these drinks, (see my later discussion), it does raise once again the question of how far governments should go in interfering with consumer choices?
On one side of the question are the libertarians who argue that individuals, in particular consumers, should have the freedom to make their own choices unless they hurt others. According to this view, consumers have the right to drink and eat what they prefer, but driving while drunk should be punished because drunk drivers are more likely to get into accidents that hurt others. One qualification is that when consumers do not have enough information to make good decisions, governments may help in providing that information. An example is the requirement that packaged foods show the amount of fat and certain other ingredients they contain.
On the other side are those who claim that many consumers are not able to make decisions in their self-interest. These consumers, according to this argument, can be fooled by the way choices are presented, may have limited self-control, may rely on inefficient rules of thumb, or for other reasons make bad choices. There is even a literature on "libertarian paternalism", which argues that governments " … should attempt to steer people's choices in welfare-promoting directions without eliminating freedom of choice." (Cass Sunstein and Richard Thaler, "Libertarian Paternalism is not an Oxymoron" University of Chicago Law Review, fall, 2003)
I agree that consumers do not always make choices in their own interest (even aside from having insufficient information). However, I question how pervasive such decisions are, especially for important decisions, but I leave that discussion for another day. Now I concentrate on concerns I have about using the government to try to improve consumer choices.
It is not clear that government bureaucrats generally understand why consumers make defective decisions, and even less likely that governments policies will help improve these decisions. As is well known, government officials, including regulators, legislators, and executives, are subject to powerful pressures from interest groups that often greatly affect public policies to the detriment of consumers.
To illustrate, consider subprime borrowers in the housing boom (or bubble) that came crashing down with the financial crisis. It is frequently argued that subprime borrowers were ignorant of the risks they were taking, and were fooled by lenders and others into buying houses with mortgages that they would be unable to handle financially.
Yet the decisions by subprime borrowers made a lot of sense in light of the very low, and sometimes non-existent, down payments that lenders required, and the low mortgage interest rates available. These borrowers had perhaps a once in a lifetime opportunity to be owners rather than renters. Sure, some families may not have bought their homes if they had known a crash would be coming, especially families that took out mortgages a year or two prior to the crash. But how could they reasonably be expected to know that when few housing market experts were predicting a crash? One should fault far more the banks that bought subprime and other mortgage-backed securities. They presumably were much more knowledgeable about housing markets than poor and first time homebuyers, yet along with homeowners, most banks suffered badly from the financial crisis.
Nor did the federal government, including the Federal Reserve, take actions that helped subprime and other homeowners. Leading members of Congress and other government officials pressured banks to offer mortgages on generous terms to consumers with bad credit histories and poor job prospects. The Fed contributed to the housing bubble through helping to keep interest rates low. Consumers made their housing decisions in an environment where both banks and governments actively promoted the purchase of homes with low interest rates and low down payment requirements.
Another example concerns the growing obesity of adults and teenagers that presumably encouraged Mayor Bloomberg's proposal on sugary drinks, and related proposals by others. One argument behind these proposals is that many adults and teenagers do not know the health consequences of their diets and lifestyles. That may well be true for some consumers, but most consumers may be rationally trading off the negative long run effects on their health for more immediate enjoyment from French fries, cheeseburgers, and other weight-raising foods. One should require evidence that the great majority of obese adult individuals do not make the connection with health before trying to restrict their consumption.
This is even aside from the fact that many of the proposed restrictions, such as Bloomberg's, would not reduce obesity by much, if at all. His proposal might even increase the use of sugary drinks. Suppose that drinks come only in 10 and 16-ounce sizes. If the 16-ounce size were banned, enough consumers might substitute 2 10-ounce drinks for 1 16-ounce drink to increase total consumption of these drinks. Of course, the drink market might respond with offering other sized drinks, but the main point would still hold that the ban could raise consumption of sugary drinks.
Children are less likely than adults to make an effective trade off between current pleasures and future costs. This is a traditional reason for distinguishing between children and adults in formulating policies. The implication in the case of sugary drinks would be to restrict access by children to these drinks. For example, these drinks could be banned from schools and other places where children congregate, or young persons might not be allowed to purchase these drinks. However, concern about children's consumption does not justify restricting the choices of adults as well.
A different reason sometimes used to justify government policies to reduce obesity is that obese adults are less healthy, and thereby make greater use of a health care system financed mainly by taxpayers. There is merit to this argument, but it is tricky because no one would reverse this argument and say obesity should be encouraged if obese individuals spent less on health care over their lifetimes because they died sufficiently earlier. Note that the mortality effect does not per se enter into externality calculations since (rational) individuals consider the effects of their behavior on their own life expectancy.
In summary, even when consumer decisions are not in their self-interest, it is questionable whether that provides sufficient grounding for government efforts to regulate and tax these decisions.