Rather than subsidizing the production of unhealthful foods, we should turn the tables and tax things like soda, French fries, doughnuts and hyperprocessed snacks. The resulting income should be earmarked for a program that encourages a sound diet for Americans by making healthy food more affordable and widely available.... A study by Y. Claire Wang, an assistant professor at Columbia’s Mailman School of Public Health, predicted that a penny tax per ounce on sugar-sweetened beverages in New York State would save $3 billion in health care costs over the course of a decade, prevent something like 37,000 cases of diabetes and bring in $1 billion annually. Another study shows that a two-cent tax per ounce in Illinois would reduce obesity in youth by 18 percent, save nearly $350 million and bring in over $800 million taxes annually.
Well we demonstrated a bit more but it is Columbia after all. At least this time they seem to be going in the right direction. But folks, it is the carbs not the fat. Carbs seem to be the main driver as we discussed. But put that aside.
We can approach this in two ways:
Pigouvian: Tax the thing. This is the Times' author's suggestion. Last year I had a bit of a flap with a Harvard Professor who opposed that, you see, this will work. You get to attack the source. You say:
Calories lead to obesity, obesity leads to Type 2 Diabetes, and Type 2 Diabetes leads to all sorts of costly things, so we the Government want to stop that behavior from the start and to do so we will tax it. Could also work with drugs logically but that is another story. But let us assume that the Pigou approach works. It is an ex ante approach and its intent is to inhibit bad behavior. Another view is its tax is to pay for abusing the calorie limits. But it puts the burden on the abuser. The only question is who gets to keep the money for what? My suggestion is the money goes into a non Government pool to pay for Type 2 Diabetes sequellae. If it runs out then the sick must ante up themselves. They must know that from the start and be reminded constantly.
The Coasean approach is as follows:
Health care costs are shared. If you decide to overindulge and get obese, then you add substantial costs to the system which I must share in. You have thus taken my property, my money via higher costs, and thus I have a right to sue you. The Government has an obligation to facilitate that at no cost and ensure payment. This is an ex post facto approach. It would apply only to added health care costs incurred by life style diseases. Yes that include obesity related diseases, alcohol, sexually transmitted diseases, smoking and the like. Get sick by choice and I get to sue you!
Now the tax approach works because we have used that again and again. It also is better in being ex ante. But it denies freedom of choice for those Libertarians. The Coasean approach is great for Libertarians for two reasons. It allows choice and it punishes publicly the offenders!
It is interesting to wonder why the Times looked solely at the Pigouvian world.
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