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Source link: http://archive.mises.org/10470/junk-food-taxes-and-the-market-solution/

Junk Food, Taxes, and the Market Solution

August 17, 2009 by

The recent debate on revolutionizing the medical system in the United States has brought Pigouvian tax concepts — arguing for taxes to counteract the so-called “social costs” of individual purchases — back into vogue. A recent article in The Economist describes a series of papers advocating new taxes on junk food.

The case made by the authors of the cited studies is simple: people who eat junk food suffer from more severe health issues than their vegetable-eating counterparts. According to The Economist, annual medical costs of an obese person are $700 greater than those of a thin person. However, those additional costs are not entirely borne by the obese. FULL ARTICLE


Gil August 17, 2009 at 7:26 am

This argument sounds as though it can go around in circles. The reflex response some would probably have against junk food is that “people not so long ago didn’t have enough to eat and only the well-to-good could afford to be fat and ‘fuller-figured’ women were considered beautiful but the free market has worked ‘too’ well because everyone has become ‘fuller-figured’ and people still find something to complain about”. Then again what if free market health care systems required fatties to pay more for insurance or if people look at the costs that can come with being obese into middle age somuchso that the fast food industry starts shrinking as people don’t like the prospect of personally paying for heart-bypass surgery? “Oh, those poor teenagers in fast-food joints will be out of a job!” Whatever!

Wesley Linder August 17, 2009 at 8:58 am

I somewhat question the premise. I think it is possible that having a $4 energy-dense meal available in 3 minutes might be the economic optimum, even if you include the increased healthcare costs. I agree with the solution, as it would reconnect actions and consequences, but we might would find that a cheap 20-minute lunch is worth enough to a worker to pay more for his or her healthcare.

Michael A. Clem August 17, 2009 at 9:16 am

There’s also the question of whether or not the health experts have their info right. If the low-carb diet people are right, then it’s not the greasy burgers and the deep fat frying that makes people fat, but the carbs from the bun and the potatoes that french fries come from. Not that government policy-makers worry about relying on accurate scientific information all that much…

BioTube August 17, 2009 at 10:00 am

Government’s never let science stand in its way – not for nuclear reprocessing(terrorists might hijack the loads!), not for global warming(polar bears are drowning!) and certainly not when a tax increase is within arm’s reach.

2nd Amendment August 17, 2009 at 11:21 am

What makes people fat is eating more calories than you burn, period.

It does not matter if you eat cheeseburgers or carrot. If you eat more carrots than you can burn in one day, you will get fat and it will not be healthy.

It makes perfectly good sense for a construction worker to eat 3 slices of pizza then frame a whole house.

It makes perfectly good sense for a steeler to eat 4 cheeseburgers then frame a building.

At the end of the day, they will have big muscles and will be healthier than the skinny veggie who only eats lettuce and sits on his couch all day.

KP August 17, 2009 at 11:43 am

2nd Ammendment:

I agree that the food choices alone do not ensure that the person will be healthy. Diet and exercise is a key part of the equation.

However, your assumption/statement is incorrect. Exercise will burn the calories however, the fat and cholesterol will still impact your body. Clogging your arteries and impacting your daily life.

Eating healthy and exercising will ensure a long and healthy life.


The article is interesting, however the assumption that you as a consumer will not be paying for another individuals is not entirely true.

Hospitals/Doctors will continue to take individuals without insurance, and will check them out and keep them stable until they can ship them out to a clinic or back to their homes. (Hippocratic oath).

If said individuals cannot pay for their procedures the balance will affect everyone who attends the hospital through higher premiums and/or fees. (Current US system)

Michael A. Clem August 17, 2009 at 11:54 am

2A, the body is more likely to pass unused proteins and fats than store them as body fat, as it does unused carbs. It is not strictly based upon calories. Obviously, if you burn the carbs you eat, then there’s no excess carbs for the body to store. But I’ll agree that food choices alone does not ensure healthiness.

G8R HED August 17, 2009 at 1:15 pm

…and then there’s type 2 food allergies which few AMA doctors acknowledge.
Type 2 food allergies can CAUSE cholesterol imbalance, obesity, cravings, persistent allergy sypmtoms, adrenal dysfunction and other physical maladies.

FarSide August 17, 2009 at 1:49 pm

I think some are missing the point – it’s not that the insurance companies will charge you more if you eat at McDonalds. The idea is that the insurance companies will charge based on your current health.

If you are charged more because you are 100 lbs overweight, then you can decide if that is because of McDonalds or Ben & Jerry’s or no exercise, and then you make the correction that you (or you and your doctor) think will be best.

The problem with taxing junk food outright is that the government is deciding what your problem is, and is trying to “fix” it for you. Of course, they are never right…

Yes, if people start cutting back on fast-food to lower insurance costs, it may also change the food industry’s structure – but when it is based on real market forces instead of government actions, the outcome is much better

@KP – “If said individuals cannot pay for their procedures the balance will affect everyone who attends the hospital through higher premiums and/or fees. (Current US system)”

How can you argue that changes to the current system won’t work, because of the way the current system works?

Shay August 17, 2009 at 2:05 pm

I’m on the too-thin side and don’t eat junk food, but taxing it sounds ridiculous. Nobody should be told what to eat. As the article describes, the solution to costs not going back to those incurring them is to stop redirecting them, as the free market can stick it to the originator quite nicely already. As for myself, the meat industry’s lax standards have made it extremely easy for me to avoid having meat ever, even though I’d otherwise have it sometimes. Same for the large number of high fructose corn syrup-laden packaged foods, easy to avoid entirely.

As for patients whom the hospital pays for, perhaps they could subsidize this by classifying the patient into one of several health groups, and subsidizing each group by increasing rates for paying patients from the same class. That way overweight paying patients would subsidize overweight non-paying patients, and non-overweight paying patients would subsidize non-overweight non-paying patients.

2nd Amendment August 17, 2009 at 2:47 pm

“Nobody should be told what to eat.”

If Obama care is passed and the government starts paying your health care bills, be certain that the government will also start telling you what you can eat and how much exercise you should do !

It all starts with “good” intentional programs like universal health care, then it becomes what you eat, how much exercise you make then they get in your head using psychiatry and they involuntarily commit and force drug you if you’re not always happy or if you’re angry etc.

God save us all !

Andrés August 17, 2009 at 5:16 pm

Cultural traditions and rational judgment should inform people what is acceptable to consume. Unfortunately the US government has already taken total control over what Americans can legally consume, via the USDA/FDA, DEA etc.

Americans have not had the freedom to choose what to eat for themselves for many decades.

This article overlooks a key aspect in this controversy; the fact that starches–not meats–are the main ingredient in a fast food meal.

Potato fries (fried in hydrogenated soybean oil), white-flour bun, and a 44oz cup of corn-sugar water to wash it all down with.

Hundreds of billions of taxpayer dollars have been spent on starches (corn, wheat, soy, etc.) via USDA subsidies & price floors.

Our Nation’s obesity epidemic cannot be the result of the free market because there is no free market in agriculture in the US for it to stem from. Instead our diabetes and heart disease is the result of government intervention and federal restrictions on freedom of choice.

The irony is that now many delusional individuals are calling on the same government that forces cheap corn into our markets to pay for the resulting hospital bills.

We must end the USDA/FDA’s stranglehold on free commerce. Only then will our people be free to heal.

… the current situation is ironic to the point of being humorous: An American taxpayer today is paying for cheap junk food AND health care for the obese.

a perfect example of the government creating a problem through regulation then coming off as humanitarian when they *attempt* (key-word) to solve their self-created problem through more regulation.

its a vicious cycle…

Andrés August 17, 2009 at 5:27 pm

Also, this is a great article for anyone interested in the Federal Government’s influence on nutrition in this country: http://www.lewrockwell.com/orig3/miles2.html

KP August 20, 2009 at 7:28 am


I’m not advocating that what Mises.org won’t work, all I’m saying is that we are currently paying for individuals without insurances, and especially those who do not care for themselves. So in a sense we are taxed because of other peoples’ faults. This type of system needs to change but it can’t because conflicting ideologies between hospitals and insurances.

Michael October 7, 2009 at 12:17 am

Andrés, thanks for mentioning my article The War on Good Food. These days you can find me over at Nutrition and Physical Regeneration.

Take care,

Isabel Chier June 27, 2011 at 10:19 pm

merely have got to point out you put together several really good points and will post a variety of choices to add on after a day or two.

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