Monday 31 January 2011

Ok, who hit the stupid button this morning?

Front page of today's Christchurch Press urges the adoption of warning and nutritional labels on foods:
A warning that alcohol is bad for you will appear on glitzy liquor and wine labels if proposals for trans-Tasman food labelling laws are adopted.

An alcohol warning is one of many proposals made by an independent panel, commissioned by the Australia and New Zealand Food Regulation Ministerial Council.

The panel also recommends fast-food outlets highlight the calorie counts of their burgers, chips and other foods.
The Press then goes to the usual suspects for comment about how critically important this move is. Except that we already know it doesn't work. People do not change behaviour when they read the calorie counts on fast food. Some eat more, having previously figured fast food had to be really really full of calories and being informed that the calorie count isn't as high as they'd previously thought. Evidence is accumulating.
Canterbury Community and Public Health nutritionist Janne Pasco said people would be "astounded" to see the calorie content of fast food.
Yup - it's not as bad as you'd thought, so have more.

Lion Nathan, one of the two big NZ breweries, has moved defensively:
In response to the report, brewer Lion Nathan promised to "voluntarily adopt consumer health messages that support responsible drinking choices, including during pregnancy".
The real killer though would be if they forced calorie counts on beer. That's a reasonable fixed cost. Lots of the smaller brewers here do unique one-offs that might well not be economical if they had to submit all their brews to nutritional analysis. And that's the Commission's Recommendation 26. NZ's craft brewers might want to keep an eye on this one. How much does it add to the cost of your new seasonal brew to have to submit a sample to the lab at time of bottling, wait on results, print up new labels with the calorie count, then label before shipping? This pushes brewers to having a set stable of beers rather than interesting and changing portfolios.

Any chance the brewers will be allowed to note the health benefits of moderate drinking on their bottles while putting on the official warnings?

The Commission also recommends mandatory GE labelling - tough call when there's easy potential for unintentional presence. Who bears the lab costs? Doesn't it make more sense to run certification for those wanting to advertise as GE-free for folks with strong preferences? It's not like non-organic foods have to advertise the pesticides that have been used.

Item the second. Wellington taxi companies try on having the City Council cartelize them, and Council seems interested. Fortunately, they may not have the power to do it directly. Here's the Dom:
There are too many taxis in Wellington and it is time to put a limit on them, the mayor says.

The taxi industry agrees and has called on the Government to introduce legislation to cap or reduce numbers in the city.

Celia Wade-Brown believes part of the problem stems from "overqualified" immigrants being funded by Work and Income into an industry that has hit saturation point.

"There seem to be too many for the city and they aren't getting a good living wage in some cases."

The New Zealand Transport Agency issues taxi licences, but legislation that deregulated the industry in 1989 does not allow the agency to set limits.

There are 1237 taxis licensed for Wellington City. About 400 were on the road before deregulation. This tripling of taxis in the past 20 years has led to overcrowded taxi stands and dubious parking practices as drivers clamour for business, especially in the late-night Courtenay Place party zone.
Mr Tyler [Taxi Federation Wellington branch secretary and rent-seeker] said the only solution he could think of for Wellington's taxi congestion woes would be for the Government to introduce legislation to cap the number of taxis at current levels.

"It would mean they [NZTA] couldn't issue any more licences in Wellington until it could be demonstrated that there is a need for it."

A less palatable option would be to return to full government regulation, which would pre-set cab numbers.

"Then they would have to reintroduce fare fixing. If you are going to limit the supply, then you have to control the costs as well."
Fortunately, it seems illegal for NZTA to set quantity restrictions. But you can have similar results by ramping up compliance costs, like they did last year with mandatory cameras. If any other industry made a bunch of claims that amount to "Please help turn us into a cartel", would NZ journalists take it at face value?


  1. I always laugh at Libertarians who argue against giving the information that consumers need to be able to make rational choices. Accurately labeling food should be compulsory, producers should know what's in their products and as they are not willing to, should be forced to share this information with consumers. It's all part of a functioning market, providing information to consumers that can be used to make rational choices.

  2. Simon, you are misinformed (which would, according to your comment, also make you irrational). There is no need to use force. If people value information enough, firms who provide it will out-compete those who don't.


  3. @Simon: You're right that it should be illegal to inaccurately label food. It's a breach of contract basically. But forcing more disclosure? If people don't want to know, why force them to?

    Should it also be mandatory that everyone reveal everything about themselves on a first date?

  4. I think you are overestimating the compliance costs: McDonald's does not run separate lab tests for each store when, in many cases, they may be using slightly different sources for ingredients and they are subject to seasonal variation, so I do not see why a brewery would need to run tests for each batch of their standard products.

    I would suspect that one would include GE information for known use of GE ingredients; the comparison with pesticides is flawed, because there are legal thresholds for the presence of pesticides in food.

    In most cases labeling with ingredients and calories would provide me with good information as a consumer ( I do eat less if something has too many calories, although I don't care if something is GE or not).

  5. I may have this wrong, but beers vary greatly in amount of protein, carbs, sugar available in the beer after fermentation. It's not just that they're using very different batches of hops or malt, it's that the basic recipes change considerably. It would be more like a bakery using the same nutritional information sticker for every one of its very different cakes. Cakes are easier than beer: you can input the ingredients list into a spreadsheet and it'll pop out the nutritional analysis. The content of a beer, I'd expect, depends a lot more on organic reactions during the brew that would be harder to get as a set piece.

    And I can't see how it makes more sense to have most products on the shelf say "May contain GE derived ingredients" instead of just letting the really purist ones certify as GE free.

  6. @Eric if it's a first date with a hooker who is expecting money from me, then yes i'd expect them to let me in on relevant info... STI status, whether they are into dressing in PVC and are willing to spank me... you know, the usual stuff I'd need to know to make my decisions. In a one on one situation like this, then I'd be happy to ask them myself.

    It is VERY hard to get information out of many food producers... even asking whether ingredients are from animal, mineral or vegetable origin yields very varied results. The simple fact of the matter is that we don't have this mythical broad market where we can take our business down the road, because there is very little variation between most products, the actual ingredients are often obfuscated and providing accurate information is not useful for business - only for consumers.

    @Roger - It doesn't make me irrational... it makes me a rational actor with bad information. I can still process accurate information rationally, just have trouble getting it.

  7. Isn't the issue with the taxi drivers that there is an oversupply created by WINZ subsidies? And they are also subsidised through taxi stands, etc.?

  8. @ Simon

    Re. your reply to me: You are contradicting the first sentence of your first post, where you say consumers need information to be able to make rational choices.


  9. @Simon: Sticking with your hooker analogy, wouldn't you be safe in assuming you shouldn't frequent the ones who won't give you a health certificate? I'm not sure why a business wouldn't find it profitable to distinguish itself to the health-conscious crowd by being more forthcoming about all its ingredients.

    Your best argument here would be that none will want to disclose GE status if they think everyone is hiding GE status and that most consumers really don't care but could be irrationally scared off. Then if everyone disclosed most folks would ignore but nobody wants to be first mover. But nothing about that scenario stops a "certified free" producer from doing well by catering to those who do care.

    @Keith: I'd be surprised if the number of cabs were that elastic to the presence of taxi stands. If it's the training that's a problem, wouldn't it be true for any other training that WINZ might provide to the unemployed?

  10. I think the compliance costs for small scale operations is a good point. But why wouldn't disclosure supporters be willing to bite that bullet? If I believe that there is some market failure wherein efficiency can be improved by mandating disclosure, then don't I also believe that any firm or any trade that would be driven out of existence by such a law is a firm or a trade that shouldn't exist? That's what the Principle of Targeting seems to say, anyway.

    This gets kind of hairy if you're arguing the market failure isn't an externality or asymmetrical information so much as a behavioral-style irrationality. I've been doodling around with it, and the whole targeting principle breaks down under this assumption: it looks like you would want oodles of "nudges" in all kinds of markets even if there's just one "internality".

  11. With regard to the calorie counts for beer, this may depend on how accurate they have too be and the testing required - my understanding is that there is something like a +/- 0.5% margin for the listed abv on alcohol. Beer recipe calculators will give you an estimated calorie count which may be within such a threshold, though as you note above - there are many factors in the brewing process that will influence the actual calorie count of the final product. Also, it is very simple to determine the actual abv of alcohol via original and final gravity readings, but not so easy for calories.

    The labelling requirement may also affect craft cheeses in the same way.

    I know beer and cheese might make me fat but I don't care!

  12. @hefe: I know about gravity readings - we've recently picked up a kit and are goofing around with it a bit. I don't know what the variance would be on calorie calculators relative to what would be needed for any label declaration.

  13. Actually, on second thoughts - cheese is probably already covered by current rules.

    @Eric - have fun with your home brew kit & enjoy not paying excise tax. Drop me an email if you need any tips or recipes.

  14. @Hefe: All kinds of small scale food producers could be hit badly by nutritional labelling requirements if they're not exempted.