The Skinny on Anti-Obesity Soda Laws
Imposing per-ounce levies or limiting serving sizes is a futile pursuit.
By MICHAEL L. MARLOW
New York Mayor Michael Bloomberg’s anti-obesity campaign to ban the sale of certain sugary drinks in large servings, especially sodas, was struck down last month in state court. A proposal for a penny-per-ounce excise tax on sweetened beverages also floundered in Vermont’s House of Representatives in February.
Yet Mayor Bloomberg has vowed to fight on, and the wider government war on obesity shows no sign of abating. Municipalities and states continue to target sodas. In February, a bill to levy a penny-per-ounce tax was introduced in California. Politicians and the media like to portray anti-obesity efforts as a battle against a food-industry conspiracy to make America fat. (Mayor Bloomberg’s limited-serving-size idea was such a nanny-state move that even the press turned on him.)
As an economist, I have two big gripes with such paternalistic public-health initiatives: The proposals aren’t grounded in data or compelling economic models, and soda taxes might catalyze a dismal chain reaction, with escalating government intrusions on personal freedom.
I recently reviewed the data on the impact of soda taxes for an article in the Journal of American Physicians and Surgeons. I also examined how these “pro-tax” studies were received in the press. The body of evidence is small, in contrast with the debate’s decibel level. One 2012 study, published in Health Affairs, spawned many news stories along the lines of this one in the Los Angeles Times: “Soda tax could prevent 26,000 premature deaths, study finds.”
The authors acknowledged encountering “uncertainties and methodological challenges” and conceded that any links between soda taxes and prevalence of obesity were “weak.” The projected 26,000 premature deaths averted were over a decade. From the headlines, I wouldn’t have guessed any of this.
The authors of the study in Health Affairs conclude that existing sales taxes may be “too low to cause changes in calorie consumption” affecting the average body mass index, or BMI. In other words, the special levy would have to be adjusted upward until the intended effect is achieved. A 2010 study in Contemporary Economic Policy estimated that a punishing 58% tax on soda might change behavior sufficiently to lower the average BMI by only 0.16 points. But a drop of 0.16 is minuscule, given that the standard threshold for obesity is a BMI of 30. (And remember, the majority of people buying these products aren’t obese.)
For an individual with a sweet tooth, getting around a high soda tax would require neither genius nor brash acts. Some people in search of a less expensive sugar fix could switch to fruit juice. If the tax were low enough, they might also swallow it, so to speak. In a 2012 Cornell University study, consumers hit with a 10% tax on soda purchased fewer soft drinks for about one month. In three to six months, they were back to the base line.
Pressing ahead with soda taxes that don’t work can have serious consequences. When new taxes are imposed and escalated with no measurable impact or end in sight, consumers know that the tax is nonsense. The next time there’s a public-health campaign that might be worthwhile—perhaps one that would keep these individuals out of the hospital—they’re resistant. In effect, they’ve been inoculated against messages that might matter.
Public cynicism deepens further when taxpayers see what becomes of the revenues earned by lifestyle taxes. Last year, an organization called Campaign for Tobacco-Free Kids ran the numbers on 14 years of tobacco-related taxes. The report estimates that, in fiscal year 2013, states will collect a record $25.7 billion in revenue from the 1998 tobacco settlement and tobacco taxes. But states are expected to pay less than 2% of it on tobacco-smoking prevention and cessation—even though the 1998 settlement was sold to fund such programs. People notice when promises go unfulfilled and tax revenues are diverted from their intended purposes.
Is there a legitimate role for government in battling obesity? Perhaps. Authorities can encourage private initiatives around exercise and dieting. They can promote more bicycle lanes. But they should stay out of the business of trying to alter behavior for people’s own good.
What would come after Mayor Bloomberg’s downsized sodas, if his dream is realized? Government-assigned limits on what we may purchase in grocery stores, what meals restaurants may offer or even how frequently we can eat out?
The very question “what should government do?” takes us down a shadowy path. Laws are different from products or services sold on the market. If you hired a personal trainer to help you lose weight and you actually got fatter, you’d fire the trainer. You can’t fire a regulation.
Mr. Marlow, an economics professor at Cal Poly San Luis Obispo, is the author of “The Myth of Fair and Efficient Government: Why the Government You Want Is Not the One You Get” (Praeger, 2011).
The article can be found here: http://online.wsj.com/article/SB10001424127887324789504578380271797966326.html
