Morning roundup

A few tabs

• The horrors of the Santa Cruz housing market
• Marxism and Public Choice
• The Clean Car Rebate Scheme cost the equivalent of over a hundred thousand dollars per tonne abated. The ETS price is about $80. Governments are stupid beasts. 
• Some very promising-looking pharmaceutical solutions to obesity. Wonder if they'll ever be available in New Zealand. 
• Govt looking to end Covid isolation payments. Pretty dumb if you want to make sure people are able to stay home when they're infectious. 

Age-restricted fast foods?

Doug Sellman's latest prescription for reducing obesity:

Does the fast food industry need to be regulated?

Prof Sellman believes only New Zealand's law makers can forcibly change and control the booming fast food industry.

"Government regulation is the answer. It is the tobacco and alcohol industry story all over again.

"The price of freedom from government regulation is enslavement of large numbers of the population to these profit, rather than health-driven industries."

But Prof Sellman isn't optimistic the Government will do anything to effect meaningful change in the fast food industry.

"Unfortunately, we live in intense neo-liberal economic times when public health is given less value by governments to the GDP contribution of big business, while the harms are relatively discounted."

What can be done to combat the booming fast food industry?

Prof Sellman suggests the following measures:

• Dismantle the marketing
• Increase the price
• Reduce accessibility (density of outlets and hours of sale)
• Increase the age of purchase
• More incentives for people to leave their cars at home

Yup. Total neoliberal conspiracy that we don't have minimum purchase ages for food.

But remember, there are no slippery slopes from tobacco regulation to every other damned thing that Doug Sellman doesn't like.

Obesity and Income

If we're tallying the social costs of obesity, what should we make of this one?

Obese men make more money than their slimmer counterparts, according to new research from the University of Otago's Christchurch Health and Development Study (CHDS).

The opposite can be said for women, with obese or overweight women earning less than women of average weight.

They were also more likely to be depressed and dissatisfied with their lives, while an obese man's mental health was generally unaffected by his girth.

The study analysed the relationship between a person's size, using their Body Mass Index (BMI), and financial aspects of their lives such as net weekly income, savings, household income. They also examined depression levels and life satisfaction.

On average, men with a BMI of more than 30 – the classification for obesity – earn $140 a week more than men with a normal BMI. Obese women earn $60 less than a woman with a "normal" BMI rating.

...The study has followed the lives of more than 1200 Canterbury children in intimate detail for 38 years. ... They decided to examine the CHDS cohort at age 30 and 35 to try and identify a link in New Zealanders.

The study found being overweight or obese was associated with poorer outcomes, but only in women, Horwood said.

"There was a clear relationship between larger men and larger weekly pay packets. But for men, being classified as overweight or obese according to the BMI Index did not negatively affect other outcomes measured in the study such as self-esteem or mental health," he said.

I've been unable to find the study referred to. The reporter says it is available in the Social Psychiatry journal, but I've been unable to find it on either the International Journal of Social Psychiatry's website, or on the "Social Psychiatry and Psychiatric Epidemiology" site. And I've not been able to find any journal that's just called Social Psychiatry. Not for the first time, I wish online news articles included links to cited studies.

Bigger picture, wage effects of consumption behaviour shouldn't count as any kind of external cost. They're effects born by the person undertaking the consumption and, potentially, others with whom that person is linked through a contractual nexus. If someone is less productive and he's paid less, does it matter whether it's due to drinking, obesity, or wanting to flip to part time to spend more time playing video games, or wanting to flip to part time to spend more time with the kids?

Touch your toes...

If lack of physical activity is really to blame for increased obesity, rather than increased caloric intake, do we switch from soda taxes to mandatory morning callisthenics?

From the American Journal of Medicine's press release on two new studies (here and here):

Sedentary lifestyle and not caloric intake may be to blame for increased obesity in the US, according to a new analysis of data from the National Health and Nutrition Examination Survey (NHANES). A study published in The American Journal of Medicine reveals that in the past 20 years there has been a sharp decrease in physical exercise and an increase in average body mass index (BMI), while caloric intake has remained steady. Investigators theorized that a nationwide drop in leisuretime physical activity, especially among young women, may be responsible for the upward trend in obesity rates.

By analyzing NHANES data from the last 20 years, researchers from Stanford University discovered that the number of US adult women who reported no physical activity jumped from 19.1% in 1994 to 51.7% in 2010. For men, the number increased from 11.4% in 1994 to 43.5% in 2010. During the period, average BMI has increased across the board, with the most dramatic rise found among young women ages 18-39.

I expect to do substantially more walking on moving to Wellington. Optimal policy, if obesity reduction were your goal, would need to consider the relative cost elasticities of caloric consumption and exercise. The jump from about 20% to about 50% of adult women reporting no physical activity does seem pretty large.

Hanley writes as commentary on the Ladabaum et al research:

What is missing from the Ladabaum et al paper is societal context. The finger-wagging Puritan in me wants sedentary folks to get up off the couch and exercise, but my public health background cautions me to go beyond the data tables and look at the lives of Americans today. 

Life, work, and leisure have changed dramatically in the US since 1988. With the blossoming of the Internet; the widespread use of computers and mobile devices at home and at work; and the increasing popularity of video games, our lives have been transformed. On an economic level, the prosperity of the 1990s dissipated after the September 11, 2001 terrorist attacks; years of war; the off-shoring of manufacturing jobs; and the Wall Street crash of 2008. Ubiquitous home foreclosures, lay-offs, and
continued unemployment/underemployment have fueled historic income inequality.

I note that none of the factors listed in her second paragraph really comes into the Ladabaum study, though poverty does correlate with obesity.

She points to poverty among single mothers as potential reason for little exercise (though the study does not give any breakdowns by single/couple household status); I'd wonder if it isn't just practicality. Who's going to get a babysitter to head out to the gym? We're hardly poor, and I couldn't imagine our shelling out for that. And while playing outside with the kids can be rather physically exerting (and is indeed my main form of physical activity), that's most easily done while somebody else is in the kitchen making dinner. In the summer, one of us would fairly regularly take the kids out to the beach or park after work and school while the other got dinner ready. You can't do that as easily in a single-parent household.

Further, while video games have indeed gotten more awesome, television is the main reported leisure-time activity of the poor and low educated. Walking around the block is not expensive; income alone should not be the main constraint except inasmuch as it means longer work hours. I'm reasonably sure, though, that recent data has higher income workers also putting in more total hours than lower income workers. Further, the time-rich unemployed have not been immune. Motivation could perhaps be a bigger issue.

The Australian Monthly [HT: @clairlemon] recently hit on some of the realities of morbid obesity - a very different problem than the smaller expansion in average waistlines.

I ask a young 200-kilo patient what he snacks on. “Nothing,” he says. I look him in the eye. Nothing? He nods. I ask him about his chronic skin infections, his diabetes. He tears up: “I eat hot chips and fried dim sims and drink three bottles of Coke every afternoon. The truth is I’m addicted to eating. I’m addicted.” He punches his thigh.

Addicted. The word is useless in my clinic, a mere barrier to any hope of self-determined change. My patient is not addicted; he’s a very lonely, unemployed young man who has gradually become socially isolated to the extent that the only thing available to him for comfort and entertainment is food. He has no friends, no money to buy other consumables, little education, no partner, no job. Some days he doesn’t leave his bed. The choice for him is to eat this food or experience no pleasure. The surgeon and I discuss his situation, concerned that he may overeat after the band has been fitted. We tell him that surgery may not be appropriate for him, given his situation. The patient is perturbed. “Well, what are you going to do for me if you won’t do the operation? Don’t you have some kind of ethical responsibility to help me lose weight?”

This is where the obesity-as-disease concept leads us – to a situation in which people demand that medicine shoulder the responsibility. What about the responsibility of the individual? And of society? My patient cries because the highlight of his day is returning from the supermarket with a plastic bag full of junk that he will eat and drink in his empty lounge room. What can I do for him? I can threaten him with his early demise, intensify his shame. I can offer him some evidence-based motivational lifestyle interventions – swap Coke for Diet Coke! Prescribe exercise? Walk for an hour at an average pace and you’ll only burn off the equivalent of one slice of bread. I could take the old-fashioned approach and wire his jaw shut. I have no hope of resolving his loneliness, his hopelessness, his lack of a job. I could, and do, refer him to a psychologist – if he’s lucky he may land one who is talented and sensitive and will try to get to the root of why this young man hates his own guts. More likely he’ll be offered a few sessions of behavioural therapy that will make everyone except him feel better.

It does not seem likely, at least to me, that folks like this would change their behaviour all that much in response to a soda tax. Better to try to address problems of long-term unemployment that give rise to this kind of despair.

I'm not offering any policy solutions to obesity. If the health and productivity costs of obesity were terrifically large, employers would start running morning callisthenics programmes to reduce their insurance premiums.* It would be great if cities fixed their regs to allow higher density so more folks could choose to be in more walkable neighbourhoods, but I'd hardly want to force everybody to live in those either.

Further, it may well be that optimal body mass has increased with the increasing opportunity cost of exercise-related leisure activity. It takes some value judgements to say that individuals' observed obesity outcomes are suboptimal where information about the benefits of exercise and about nutrition is readily available. Sure, most folks surveyed will claim that they wish they could be thinner. But whether that's notional or effective demand where half of those surveyed are undertaking no physical activity, well...

In related news, Brand-Miller and Barclay have been cleared of allegations that they'd falsified data in their study showing declining sugar consumption in Australia. Overall sugar consumption is down, though it may be up in some population subgroups. The review notes that increased obesity among those consuming less sugar may come down to reduced exercise.

* Of course, offsetting behaviour can kick in with these things. Follow the link....

Soda taxes revisited

Soda taxes don't do much to affect obesity. A new paper by Fletcher et al in Health Economics looks at effects of American soda taxes across U.S. states. While 'soda taxes' aren't common, differential sales taxes on soda aren't uncommon; soda is often exempted from generalised food exemptions from state-level sales taxes. Consequently, soda can have an effective tax rate of up to 12% more than other foods and non-alcoholic beverages, though the average was much lower.

They find that sales taxes have no statistically significant relationship to soda calorie intake and may increase consumption of calories from non-soda beverages. In one specification, they find that a one percentage point increase in the soda tax increases total daily caloric intake by 27.7 calories; I rather suspect that they're here picking up an endogeneity problem: governments will implement soda taxes when obesity is rising.

Supporters of soda taxes have suggested that tax hikes in the range experienced in the US will understate the potential effects of a much larger tax hike: if effects are non-linear, this is entirely possible. But Fletcher et al find zero evidence of non-linearities in tax effects within the range of US taxes. If there were some non-linearity, we'd expect there to be at least a little action in the quadratics and high-order polynomials; the linear specification fits best. But we can't rule out non-linearities that only kick in well outside of sample.

They'd previously found strong evidence of substitution effects among children and adolescents: taxes on soft drinks reduced soda consumption but induced an entirely offsetting increase in calories from other non-soda drinks. And recall that Klick et al found that relative prices of healthy and unhealthy foods didn't affect obesity either.

See also Paul Bedard at the Washington Examiner and Chris Snowdon.

Obesogenic environments?

Gareth Morgan wanted restrictions on where "fake food" outlets might be located.

Placement of junk food outlets – local communities have a say over the placement of alcohol outlets, but we can’t stop junk food outlets setting up around our schools or clustering in poor neighbourhoods. This could be changed if planners had to take health into consideration in their decisions.

From The Lancet, online version 29 November 2013:

Influence of the retail food environment around schools on obesity-related outcomes: a systematic review
...
This review of the scientific literature found very little evidence for an effect of the retail food environment surrounding schools on food purchases and consumption patterns, but some evidence of an effect on bodyweight. Given the general lack of evidence for association with the mediating variables of food purchasing and food consumption, and the observational nature of the studies included in this review, it is possible that this finding is a result of residual confounding.

Limit fast food outlets?

Should we blame fast food outlets for obesity?

Canterbury student Alice Robertson thinks so. The University's press release on her internship project has been picked up in a few places (Herald, Press). Alice's paper isn't yet available, but I've been promised a copy when it is. It sounds like it's mainly a literature review; she notes Day and Pearce, 2011 as particularly relevant. That paper found clustering of fast food outlets around schools. Such clustering doesn't prove an obesity link, just that the kinds of places that wind up being decent venues for primary and intermediate schools are also the kinds of places where fast food outlets wind up locating.

Robertson suggests limiting the number of fast food outlets near schools.

Rachel Webb is a doctoral student in our Economics department. She's presenting some of her thesis work at this year's NZAE meetings. She hasn't sought any press releases on her work because she likes making sure everything's nailed down before talking to the press office. And so her paper still says "don't cite without permission". But she's said it's ok for me to post on what she's been up to.

She's investigating links between obesity and high birth weights. In her quest for instruments that might correlate with obesity risk but that should not have any independent effect on high birth weight risk, she thought about fast food venue concentration. There's some evidence that such venue concentration affects obesity. If if doesn't independently affect high birth rate risk, then it can be an instrument (subject to the usual validity tests).

The density of different categories of dining establishments with a particular focus on fast food restaurants within the Territorial Local Authority (TLA) area that the woman resides in comprises my next set of instruments. A significant relationship between fast food restaurant density and obesity has been a prominent finding by health researchers over recent times. Rosenheck’s (2008) systematic review of 16 studies concludes there exists a significant relationship between fast food restaurant density and obesity[21]. It is generally agreed that fast food proximity lowers the notional cost of eating high caloric food and can therefore lead to higher obesity risk though the causality of the relationship is disputed [22]. It should not have any direct effect on high birth weight risk. However, like with rurality, there are plausible factors which could correlate with both food venue type and concentration and high birth weight risk. For instance, if unhealthy food venue options tend to concentrate in areas where people tend to be less health conscious for reasons that transcend deprivation level, ethnicity, age, rurality, or wider region then food venue type and concentration may have an avenue of correlation with high birth weight risk outside of the effect on obesity that I am unable to control for and could invalidate its use as an instrument. It is also possible that food venue type and concentration may be correlated with high birth weight risk through the effect of weight gain during pregnancy. Validity tests are required to check the soundness of this instrument.

So Rachel wasn't interested in the effects of fast food restaurant density on obesity per se: she was just looking for plausible instruments. And she's found something rather interesting.

A curious finding from the first stage results was that the fast food restaurants density in a TLA did not have the expected effect on obesity measures. The majority of the fast food chains showed consistently negative coefficients in the first stage and particular chains such as Hell’s Pizza, Burger Wisconsin, and McDonalds frequently showed a significant negative relationship with the propensity to be overweight, obese, and morbidly obese. KFC and Pizza Hut were the only chains to have a generally consistent positive relationship with obesity risk. It is not clear what is driving these findings as both median income of the TLA and the deprivation level of the meshblock have been controlled for suggesting it is unlikely to be socio-economic status, nor could it be the effect of living in urban areas as rurality variables are also included. The overall number of fast food establishments per person in a TLA was generally insignificant so it doesn’t appear to be driven by substitution away from less healthy options such as fish and chips either. More research into the effect of fast food on obesity is warranted. 

So, fast food restaurant density, in her regressions on New Zealand data, tends to reduce the prevalence of obesity. When she'd first presented this to the Department, I'd wondered whether what she was picking up was that folks hitting McDonald's would otherwise have been going to a fish'n'chip shop and eating even worse food; she's checked that, as noted in the blockquote, and that wasn't driving things.

Rachel wouldn't draw policy conclusions from her thesis work. But I'll draw one: we shouldn't be too hasty to ban fast food outlets near schools. I'll draw a second one: had Rachel sought press releases about her work, there would have been less uptake. There's reasonable media demand for panics about fast food restaurants, and about alcohol, and about "the kids these days".

Morning roundup

Your morning list of things worth knowing.

Item the First: climate sensitivity may be lower than we'd thought; this bends optimal policy towards adaptation and away from abatement. I still think it best to have a low budget-neutral carbon tax set to ramp up on a well-announced schedule, but with flexibility to twist the schedule up or down as we learn more about climate sensitivity.

If such estimates were right, they would require revisions to the science of climate change and, possibly, to public policies. If, as conventional wisdom has it, global temperatures could rise by 3°C or more in response to a doubling of emissions, then the correct response would be the one to which most of the world pays lip service: rein in the warming and the greenhouse gases causing it. This is called “mitigation”, in the jargon. Moreover, if there were an outside possibility of something catastrophic, such as a 6°C rise, that could justify drastic interventions. This would be similar to taking out disaster insurance. It may seem an unnecessary expense when you are forking out for the premiums, but when you need it, you really need it. Many economists, including William Nordhaus of Yale University, have made this case.

If, however, temperatures are likely to rise by only 2°C in response to a doubling of carbon emissions (and if the likelihood of a 6°C increase is trivial), the calculation might change. Perhaps the world should seek to adjust to (rather than stop) the greenhouse-gas splurge. There is no point buying earthquake insurance if you do not live in an earthquake zone. In this case more adaptation rather than more mitigation might be the right policy at the margin. But that would be good advice only if these new estimates really were more reliable than the old ones. And different results come from different models.

Item the Second: All that stuff about food deserts? Probably not worth worrying about. And fast food outlet concentration likely doesn't matter either.

The researchers, who reported their findings in last week's journal Preventing Chronic Disease, looked at the habits of 97,678 adults in the California Healthy Interview Survey, and their weight, body mass index, and other indicators such as income.

They overlayed a map to determine the number of fast-food places, full-service restaurants and various kinds of food stores within five ranges, from half a mile to three miles from home.

“Evidence is more tentative than often presented in the news media and in policy arguments” linking obesity with the food environment, the researchers said. That is, the idea that people who live close to lots of fast-food outlets and far from big, well-stocked supermarkets are more likely to be overweight or obese, or to show other health results of poor eating habits.

“The evidence is not clear on whether promoting or discouraging a particular type of food outlet is an effective approach to promoting healthful dietary behavior and weight status,” the researchers said. Los Angeles has tried legislating the types of food outlets in South L.A. to help bring down obesity rates.

Caveat: I've not had a chance to read the underlying paper. And there are all kinds of endogeneity problems in this general line of research: it's hard to find an instrument for fast-food outlets' opening, and you need one to sort out the endogeneity problem if there is any correlation: do fast-food outlets cause obesity, or do fast-food outlets open in places where a lot of obese people live? But, the LA Times reports they found only weak association between location and outcomes; they put it down to that most people are able to drive to get what they want.

Item the Third: Suppose your company's parked van gets hit by another driver, pushing it into a restricted parking space. And the other driver reports it to the police. Would you expect the police to call you to let you know your van had been smashed up? Or that they'd call Council who'd send out the tow-truck for parking violations? If you live in the UK....

Item the Fourth: Bicycle helmet laws still cost lives on net. Here's a website run by cycle campaigners pointing to the literature on it. Here's a town in Washington State that dropped its helmet law because Council worried about an interesting kind of legal liability.

For 15 years, until June 1, Milton, population 7,000, 45 minutes south of Seattle, required helmets for all bicyclists and skateboarders. But with its 12-officer police force stressed by an increase in domestic violence, alcohol abuse and property crime, all of which surged through the recession, law enforcement priorities now go way beyond hectoring people about their headgear.

And an inability to enforce a law on the books, the town’s insurance consultant argued, created administrative unevenness that — in the event of an accident by someone who was not nagged or cited about helmet use — posed a liability risk that could bankrupt the community with one swipe from a punitive-minded jury.

For once, silly jury verdicts have had a beneficial chilling effect. HT on Item 4 to Greg Dwyer.

Obesity and mortality revisited

The obese cost public health systems less in the long term because they die earlier.

And now it looks like those who are merely overweight rather than highly obese actually live longer than those who are of normal weight. JAMA reports that only categories 2 and 3 in the obesity rankings are associated with higher mortality risk; the overweight have a mortality risk of 0.94 compared with normal-weight individuals. From the study:

This study presents comprehensive estimates (derived from a systematic review) of the association of all-cause mortality in adults with current standard BMI categories used in the United States and internationally. Estimates of the relative mortality risks associated with normal weight, overweight, and obesity may help to inform decision making in the clinical setting.

The most recent data from the United States show that almost 40% of adult men and almost 30% of adult women fall into the overweight category with a BMI of 25 to less than 30.¹¹¹ Comparable figures for Canada are 44% of men and 30% of women¹¹² and for England are 42% of men and 32% of women.¹¹³

According to the results presented herein, overweight (defined as a BMI of 25-<30) is associated with significantly lower mortality overall relative to the normal weight category with an overall summary HR of 0.94. For overweight, 75% of HRs with measured weight and height and 67% of HRs with self-reported weight and height were below 1. These results are broadly consistent with 2 previous meta-analyses^114- 115 that used standard categories. In a pooled analysis of 26 observational studies, McGee et al¹¹⁴ found summary relative risks of all-cause mortality for overweight of 0.97 (95% CI, 0.92-1.01) for men and 0.97 (95% CI, 0.93-0.99) for women relative to normal weight.

If the healthists keep talking about high proportions of the population who are overweight and obese, but it's only the heaviest cohort within that group that experience increased mortality risk, and that group is only a small portion of the overall category we keep hearing about in the paper, why add the overweight and the category 1 obese to the tallies? To get bigger numbers and fuel perception of a crisis. Timandra Harkness explains [HT: @cjsnowdon]:

The reason this unassuming paper drew howls of outrage was the same as the reason the benefits of moderate alcohol intake are never noted without criticism: it spoils the headline health message that Fat is Bad.

Even worse, it blows the cover on the great myth – that an epidemic of Bad Fatness is sweeping the developed world. By including the dangerously obese, the innocuously tubby and the healthily plump in one category, ‘overweight including obese’, 60 per cent of the English population are labelled as potentially At Risk.

Being At Risk means these people need guidance and protection from their own vulnerable state, from the temptations of our obesogenic world and the frailties of their own sugar-addicted brains. At such a time of national peril, no measure is too extreme.

But less than a quarter of English adults are obese, according to new figures released just before Christmas, a fraction almost unchanged since 2007. And the ‘morbidly obese’ category – BMI over 40, the ones for whom it really might be worth shedding a few pounds, medically speaking – also remains steady since 2009 at 2.5 per cent of the UK population.

If only one in 40 of us is in significant weight-related danger, why do the other 97.5 per cent of us need to be protected by the state against sugary cereals and fizzy drinks? Could it be because only a few of us have fallen, but all of us are in peril? Weak, foolish and easily led astray, we need to be frightened back on to the right path. Thus Tam Fry, spokesman for the National Obesity Forum - who has called for children to be monitored from birth for signs of obesity - told the Independent: ‘If people read this and decide they are not going to die… they may find themselves lifelong dependents on medical treatment for problems affecting the heart, liver, kidney and pancreas – to name only a few.’

I suppose that an alternative hypothesis would be that some folks find the obese to be aesthetically displeasing and prefer to base policy interventions on a purportedly paternalistic basis than on an externality-via-aesthetics argument. The latter is more economically defensible, provided that we expect Hollywood et al get things roughly right about what sorts of actors more people prefer looking at, but harder to defend in popular forum. I'd also expect that since the morbidly obese suffer wage and health penalties already, any incremental Pigovean aesthetic tax added to the mix wouldn't substantially affect things.

Social Costs of Healthy

Chris Auld was prescient. If we require corrective policy to internalise pecuniary costs running through the public health system, then we have to do it across the board. And what if it turns out that healthy people wind up costing more because they have a longer retirement in which they consume lots of subsidized health services? He wrote:

If healthy behaviors wind up increasing lifecycle health care costs, we should either subsidize less than we otherwise would, or perhaps even tax, healthy behaviors. Healthy behaviors in this scenario benefit the person exhibiting the behavior but impose costs on everyone else, and this logic demands that we discourage healthy behavior relative to whatever policies we would otherwise have enacted.

This argument does not sit well with me.

A new article in PLOS Medicine finds that the lifetime health costs of the healthy are indeed highest:Non-smokers of moderate BMI imposed the highest lifetime costs. [HT: @Dick_Puddlecote, who points to the Telegraph's report on the study.] Update: I'd missed the date on the PLOS online study; it's from a few years ago. So Auld's prescience may have been overstated. Thanks to Chris Snowdon for the correction.

From the article's conclusion:

In this study we have shown that, although obese people induce high medical costs during their lives, their lifetime health-care costs are lower than those of healthy-living people but higher than those of smokers. Obesity increases the risk of diseases such as diabetes and coronary heart disease, thereby increasing health-care utilization but decreasing life expectancy. Successful prevention of obesity, in turn, increases life expectancy. Unfortunately, these life-years gained are not lived in full health and come at a price: people suffer from other diseases, which increases health-care costs. Obesity prevention, just like smoking prevention, will not stem the tide of increasing health-care expenditures. The underlying mechanism is that there is a substitution of inexpensive, lethal diseases toward less lethal, and therefore more costly, diseases [9]. As smoking is in particular related to lethal (and relatively inexpensive) diseases, the ratio of cost savings from a reduced incidence of risk factor–related diseases to the medical costs in life-years gained is more favorable for obesity prevention than for smoking prevention.

Here's the graph of the expected costs and benefits of smoking and obesity prevention, imagining a costless intervention that would switch the obese or smokers into normal-weight non-smokers. For the first few decades after the assumed-costless intervention, all's great. And then...

If it were free to turn smokers into non-smokers, and if we ignore tobacco excise revenues entirely, they say the costless intervention only passes a fiscal cost-benefit analysis for discount rates higher than 5.7%. If we remember that tobacco excise revenues are heavily front-loaded, being paid often decades before the health costs obtain, then you're not going to find a discount rate where the costless intervention saves the government money.

They warn that they've only focused on health care costs and have left aside productivity costs. But the bulk of productivity costs are borne by the drinker, smoker, or eater himself: they're reflected in lower wages.

Smokers remain the benefactors of the rest of us - voluntarily paying ridiculous levels of tax and then dying before taking much out of the superannuation system.

It's a mistake to model governments as unitary agents. The zealot parts of government want to ban tobacco; the sane parts worry about revenue consequences. I wonder, as does Lionel Shriver, whether worries about lost excise motivate government antipathy towards electronic cigarettes. The zealot side of government doesn't like them because they let smokers keep having fun without moral consequence; the fiscal side doesn't like the lost revenue: bootleggers and baptists in different government departments.

Meanwhile, the British Labour Party contemplates bans on sugary breakfast cereals. I agree entirely with Alex Masse's piece at the Spectator. Alex writes:

Yet one of the features of our society is the steady accumulation of influence – and increasingly of power too – of what might be termed the Government-Health-Security Complex*.

Sometimes slippery slopes really do exist. Some folk warned that the public health industry – that is, the Government-Health-Security Complex – would never be satisfied with its battles against tobacco and alcohol and that it would, in time, launch fresh offensives against fast food, soft drinks, and all things salty an sweet.Don’t be silly, we were told. That’s different. Well, who looks stupid now?

Like so much else this is also, in the end, a question of power and class. The NHS – treated as some kind of secular religion – is to be used as a means of shaming the population (especially the bestial lower orders) into behaving in a more comely, acceptable fashion. The class prejudice inherent in all this is rarely far from the surface. The common people are revolting. Their pleasures must be taxed or, wherever possible, suppressed entirely (see extending the ban on smoking in working-class clubs for example).

And, always, the message is simple: the people – poor, lardy, wheezing, sods – are too stupid to make their own choices and it is government’s role to save them from themselves.

Next step then is plain packaging for breakfast cereals....

More fat taxes, and a minor correction

I chatted with Radio New Zealand about fat taxes on Wednesday. I talked about the problems of defining healthy and unhealthy foods, and the lobbying waste that can result around boundary cases if we go the route of taxing specific foods rather than content. And I noted that Denmark dropped its fat tax because of the administrative cost it placed on Danish firms, as well as the cross-border shopping it induced. So the summary here isn't quite accurate. I wouldn't have said that it was abandoned because of the difficulty of defining healthy and unhealthy foods; I gave that as a reason against implementing one here, but that wasn't quite what happened in Denmark.

For more on Denmark's abandoning of fat taxes, see:

• The Economist
• The New York Times

The Times story notes that it's harder to introduce comprehensive taxes like Denmark's than to simply tax soda. It doesn't note that if you only tax soda, people flip to other sugary products. If you're going to do it at all, you probably have to do it comprehensively: excise on sugar or fat following a regime similar to that for alcohol in that it's levied on producers at the point of manufacture. 

A few minor problems that would need to be sorted out:

• Small producers will have problems in paying the tax up front while waiting for payment of product. Not sure there's much that can be done about it other than giving a bit of time to make payment. I know that some of the smaller alcohol producers worry about this when looking at cash-flow.
• Some food products are both input and output - you can either buy sugar or fats as a consumer product, or you can buy them as an input for making other stuff. If any sugar bought as an input turns 100% into something present in the consumer product, then this doesn't matter. You tax it at point of production and the effect flows through the system. But what of food production where the sugar or fat itself disappears but is a necessary intermediate good? If you fry with butter, only some of that butter makes it into the food (compared to, say, just eating a stick of butter). If you turn sugar into alcohol, the sugar's then gone. Any sugar or fat that cooks off or is turned into other things as part of the food production process means that you're going to have to have a tax rebate system for people using sugar or fat as an input.
• You might think this is easily solved by taxing only those who sell directly for final use. But you still need a way of registering and tracking those who buy products for intermediate good use from the same outlets that sell to final consumers. And you'd still have the problem of assessing things properly for home-based production. If we tax based on the average amount consumed, people who eat sticks of butter are relatively under-taxed while those who use it for greasing cast-iron pans are over-taxed. The same problem holds for cooking with alcohol, and is recognized with tax-free salted cooking wines and sherries. Maybe it is a less important problem in cooking - I do not know enough about food chemistry to know. But I do know that some home brewers and distillers use sugar; maybe taxing them on sugar they don't eat is a second best workaround for there being no tax on small-scale home distillation. 
• If you tax sucrose, people will switch to fructose and glucose. You've gotta tax all the sugars to avoid any inefficient switching, but if there's reason to expect that any of the sugars are less bad than the others, you could levy different taxes.
• You'd need to set up a regime for assessing tax on imported food products, with the importer then being liable for any fat/sugar tax. So long as imported products have all the nutritional labelling that would allow accurate and timely excise assessment, great. Delays at the border kinda suck though, especially for fresh fruit that should be subject to any sugar tax. I suppose that we could deem different categories of fruit to contain some average sugar content and tax them appropriately. [I still don't get why folks who want fat and sugar taxes want to subsidise sugar-laden fruits. Fructose doesn't get any less fructosy for being embodied in a strawberry]. 
• There are substitutes for fat that are worse than fat. I expect a reasonable amount of awfulness consequent to any large tax on butter, lard, or other common fats.

More fundamentally, I just do not believe that there is a plausible market failure based case for fat and sugar taxes. 

The best case you can make for it is the fiscal externality where people eat less healthy things and the cost is borne by the public health system, but I don't find it all that compelling an argument. Recall that we impose Pigovean taxes not because we want to punish bad people but rather to get rid of the deadweight cost of some underlying inefficiency. If fat and sugar consumption are not all that elastic, then the bulk of the effect of the public health system is pecuniary rather than technological. That is, if in a world where people paid 100% of their own health care costs, they wouldn't consume that much less sugar, then the public health system does not much screw up our choices over fat and sugar consumption. And the point of a Pigovean tax is to induce people to make the choice that they would have made in a full-cost world.

Still too opaque? Here's an analogy. Suppose that you (and a lot of people like you) love Marmite and Chex. You have to eat them together - whenever you buy Marmite, you have to eat it on a Chex biscuit. And you eat 3 of those cracker-Marmite combos per day, no matter what. Each of them costs $1, with half the cost being Marmite and half the cost being the Chex. But your demand curve is perfectly inelastic: if the cost were $10, you'd still be eating three per day. Now the government comes in and says that, from now on, Marmite is free. You go to the government dispensary every day and get three servings of Marmite to put on your Chex. Then somebody comes out and puts out a "Social Costs of Chex" study that counts as cost to the country everything that the government spends on Marmite because of people who mix Marmite and Chex. You can make a fairness argument for a Chex tax to compensate the government for its Marmite expenditures - in which case you wonder why they made it free in the first place. But you can't make an economic efficiency argument for it - it's just a transfer. And what about all the people who eat their Chex without Marmite and whose consumption of Chex may be more sensitive to price?

More realistically, there's a mix of technological and pecuniary effects. Because people aren't annually confronted with an insurance bill itemising their failures and the things they could do to lower their costs for the subsequent years, people very likely make some different choices around nutrition, exercise and risk than they otherwise would. But how much of the total cost of their health care would have obtained anyway, and how much is due to the distortion in behaviour caused by the existence of the public health system? Suppose that some of our Chex-eaters, above, shift to eating 4 Chex per day instead of 3 after the free-Marmite policy. That last Chex-and-Marmite bit of wonderfulness is inefficiently consumed and could be subject to Pigovean taxation, but everybody seems to think we need to be charging enough to cover all the free-government-Marmite costs of Chex eaters. 

Further, I've yet to see any full life-cycle costing on obesity. You can get big numbers if you add up the costs of obesity-related disorders, but what about savings to the pension system where the obese die early? And what about the costs that the obese would have imposed on the health system in old age were they instead thin people? I suspect that the sign of the effect is still negative, but I'm not massively confident about it. And I doubt that many of those proposing fat and sugar taxes care about the true direction of the sign on the pecuniary effect. I still worry that, someday, we'll figure out that it's the healthy people who live to 100 who wind up costing the government the most money. And then...

The other argument you can make for fat and sugar taxes is based around behavioural economics and internalities. The case there is that while some true version of ourselves would like to constrain our existing selves against eating tasty things that may have long run costs, that true version of ourselves is every day thwarted by the me-of-the-moment who insists on eating too much Marmite-and-Chex.* But that requires, pretty critically, that those individuals, if given the choice, would prefer to be bound against consuming the less healthy products. And even if we can show that for some individuals, that hardly gives us reason to impose population-wide measures that hit those who really prefer to be unbound - you would have to prove that the internality-based gains to those with self-control problems outweigh the losses in surplus imposed on the rest of us. And, you'd have to show that fat and soda taxes are the most efficient means to that end in a world that has Stickk.

Previously on-topic at Offsetting:

• Paternalism: for children and the lower orders.
• Fat taxes and elasticity with respect to public health
• Penn & Teller on Nudges and Fat Taxes
• Paternalism and class
• Fat Freedom
• Obesity Costs

* I can't stop thinking about Marmite and Chex now. I hate you Kiwis for getting me hooked on the stuff just before the earthquake shut down the Marmite factory.  

Obesity costs

Another day, another cost study. This time we're told that obesity costs New Zealand between $722,000,000 and $849,000,000.

Here's a thought experiment. Imagine that we wave a costless magic wand and every obese person suddenly has a BMI right in the middle of the healthy range. Would long term health costs increase or decrease? Well, we know that we'd save a bunch of current costs of treating diabetes. But everyone dies of something, eventually. And many of those somethings affect the Ministry of Health's budget. If the diseases from which the obese would otherwise die are less expensive than the diseases that do affect the obese, then obesity has net cost on the health system: the cost difference and time discounting. But we really should net out the costs that the obese would have imposed had they not imposed obesity-related costs.

Total health care costs were estimated at $623.9 million. The additional costs were costs of productivity losses associated with obesity: premature mortality and excess sick leave. Here's the two approaches they used.

The "Human Capital Approach" takes the present discounted value of all future earnings up to the age of retirement for those who died prematurely due to obesity. The "Frictional Cost Approach" takes three months' base salary assuming average salaries and workforce participation rates, then adding an additional training and recruitment cost of 97% of the FCA premature death cost. They added to both of these costs of short term absenteeism: the overweight and obese take an extra 0.4 days' sick leave on average in Australia; this was multiplied by obesity prevalence rates and average population daily wage rates. Depending on whether the FCA or HCA method were used, that gives us the additional $98-225 million.

But there are a few problems here too. Obesity is pretty concentrated in lower income strata. Some of this will be obesity issues resulting in lower salaries, but it seems awfully likely that the kinds of things that lead to obesity are also the kinds of things that lead to lower income. Using average wage rates and average workforce participation rates then is a pretty poor proxy for wage rates among those whose obesity issues were so severe that they died early as consequence. You could make a case for it where obesity caused the lower wages; when it's more a consequence of other factors that drive income, as well as having its own negative effect on income, not so much.

The study's authors note this:

With regards to the estimates of the lost productivity costs, it could be argued that obesity and overweight is more prevalent among low SES groups and therefore using an average wage to calculate the productivity cost estimates is not a true reflection of the costs. Our analysis was based on the availability of average wage and participation rates data in NZ.

But there's an awful lot of data out there that would let you scale wage rates among the obese. For example, the 2008/2009 NZ Adult Nutrition Survey. They sort people by NZ Deprivation Index 2006 quintiles, where 1 is least deprived and 5 is most deprived. 41% of Decile 5 females class as obese, with only 26.8% normal; 48.5% of Decile 1 females class as normal and 16.5% as obese. The male profile is flatter in income. Here's the table.

All you'd need to do is weight wages by relative quintile populations and quintile wage rates. You could at least get an average fractional multiplier to apply to the average age-wage-gender profile.

I wonder how many multiples of the total annual health care budget you'd get if you added up all the different "Costs to the health system" figures.

In related news, the Science Media Centre asked me for comment on a new metastudy on the effects of fat taxes. Here's what I provided; bits of this may be showing up in a few places.

"Taxes and subsidies to encourage healthy eating are notoriously difficult to administer in the real world. They're the kind of thing that sounds simple, but wind up being a bit of a compliance nightmare. Why subsidise fresh vegetables while ignoring frozen or canned vegetables, which are just as nutritious and favoured by poorer cohorts? Where then do we draw the line between a frozen unprocessed product and one that's too processed to count any longer? If minted peas count, where do we draw the line between a frozen vegetable and a processed food product? I'm reminded of a recent Australian case where a judge had to decide whether a mini-ciabatta counted as bread (GST-exempt) or as a cracker (subject to GST). The food importer flew in a bread expert from Italy as a witness in the case. These kinds of systems lead companies to find strong tax advantage in having their products being declared compliant. The accountants, lawyers and bread-deciders can do well out of it, but that's not necessarily to the national advantage. Denmark recently abandoned its one-year-old fat tax because of the administrative burden it placed on Danish firms."

"The paper finds a ten percent increase in the price of soft drinks via a soda tax would reduce soda consumption by 9.3 percent but would only reduce overall energy consumption by 0.2%. People who want to consume sweet things shift away from taxed sweet things to less-taxed sweet things."

"The paper focuses on the effects of tax and subsidies intended to affect consumer behaviour. Another way of tackling the problem is to look at how consumer behaviour changes with other changes in the relative prices of healthy and less healthy foods. Jonah Gelbach, Jon Klick and Tom Stratmann used American data from 1982 to 1996 to see whether changes in the relative prices of healthy and unhealthy foods over time across U.S. regions affected obesity rates. Because overall food prices vary by a lot more than any real world fat tax, their study gives us a way of examining what can happen with very large price increases. They found that the relative price of healthy food really does little to determine overall obesity rates. While we should not expect large health benefits from fat or sugar taxes, the administrative costs are real and substantial."

See also this Mercatus primer.

Watching the slide down the slippery slope

For now, it's just a proposal from the New Zealand healthists.

Health officials worried about an obesity epidemic want fast-food advertising dropped from public property, including bus shelters, and are questioning fast-food and soft-drink sponsorship of public events.

They have also raised concerns over the lack of political power to stop fast-food restaurants being built near schools and in poor areas.

What about McDonald's sponsorship of things like Ronald McDonald House? Says Auckland Health Board Clinical Director Robyn Toomath:

"We've reached that purist approach with tobacco, completely hardline. There's no way in the world we would have a Rothman's Centre for Kids in Hospital. You start off saying we won't promote the sale of goods, then the next step is [not allowing] sponsorship of these companies."

McDonald's, Rothman's, no logical difference. No slippery slopes, 'till you're close to the bottom.

For a more reasonable take on McDonald's and the miracles wrought by careful supply chain management, consult Blunt Object [language warning].

Banning hate

You can't ban hate. You can put in laws banning discriminatory treatment in employment or consumer markets, but if the differences in treatment arose from real differences in costs rather than hatred, you're probably doing more harm than good.

Today's edition? Here:

"Fat hatred" should be banned like racism or sexism, says a pro-fat scholar who argues that obesity isn't a health problem.

Massey University lecturer Cat Pause says "the war against fat" and "fat phobia" were much more damaging than carrying a few extra kilos or, in her case, a lot.

"Obesity is not a big health problem. If you really look at the science, that is what comes through."

...In New Zealand – the world's third-fattest nation – more than a quarter of the population are classed as obese.

But Dr Pause, who has a PhD in human development, says it is "fattism" that should be feared, not expanding waistlines.

She called on New Zealand to be the first country to outlaw discrimination against fat people, which has been described as the "last socially acceptable form of prejudice".

Fat people were having to live in a culture that openly hated them, she said.

I agree with Cat that policy moves trying to bash fat people really aren't warranted.

But suppose that she's wrong and most other folks are right about the actual health or other costs of obesity. What happens if we mandate that health insurers ignore weight if weight actually does predict health problems? We effectively socialise the private costs of being obese. What happens if we mandate that employers provide reasonable accommodation for the obese? Employers start avoiding hiring them in the first place for fear of having to make unreasonable accommodations. If we ban airlines from requiring larger passengers to purchase extra seats to prevent overflow into the neighbour's seat, we again socialise the costs of obesity, either by making every other passenger pay extra for the obese person's extra free or subsidized seat, or by giving random draw unlucky lotto tickets to other economy-class passengers.

Further, if markets are competitive, any firm that unreasonably penalizes the obese will be out-competed by one that doesn't. Discrimination ought only persist if it either reflects something real, or something that other customers value - which is also real, though subjective. You can imagine a nightclub that only lets in thin people being successful in the market. But discrimination against the obese in this situation would be little different than discrimination against the ugly, or bars banning economists' entry because we're argumentative. You could maybe make the case that banning nightclubs from having exclusive entry policies can shift social norms such that, in a few decades' time, the ban would no longer be needed. But it would be a pretty speculative proposition; there seem to be reasonably fixed beauty preferences that correlate with a mix of genetic fitness (symmetry) and fertility (waist-hip ratio). And preferences against having economists around ought to be understandable to anybody who reads this blog.

The more that is done to ban markets from responding to any real costs of obesity, the more justified are policies that try to tax the correlates of obesity like excess sugar consumption. It's more efficient to let markets sort out costs associated with the output than to have governments tax the inputs where people have very heterogeneous production functions, where the costs of obesity are heterogeneous across activities, and where insurers very likely have a better handle on whether any individual case warrants higher premiums.

Paternalist visions

Will Wilkinson and a colleague at The Economist have been sparring over paternalism. Where M.S., Wilkinson's colleague, argues paternalistic policy is an acceptable democratic way of getting towards desirable social goals, Wilkinson reminds us that a liberal democracy tries to leave a lot of decisions about the good to the individual.

Notice that we may convert any paternalistic argument into a benignly "democratic" argument simply by asserting that the intended subject of the proposed law is the character of society as a whole. Well, do we want a society in which the influence of heretics is left wholly unchecked, threatening public spiritual health? Torquemada didn't. The Taliban doesn't! Suppose we concede, just for the sake of argument, that this sort of public-spiritedness isn't paternalistic. Is it better than paternalism? It may be democratic. But is it liberal?

Liberal democracy is liberal in the first instance because it removes the protection of basic rights from the domain of collective deliberation. Do we want to be the kind of society that allows people to worship any way they like? That allows poor people to vote? That lets folks say sexy things, communist things, impertinent things, stupid things, Thomas Friedman things. Yes, yes, and mostly yes. Indeed, we think this stuff is so important, we mostly agree it ought to be illegal to put it up for a vote! My colleague suggests that there's something downright anti-social in making a principled argument against limiting the scope of peaceful individual choice. But I love society. Especially liberal ones.

The liberal society allows the existence of a personal sphere that's outside of the political sphere; I really like bright line rules keeping the two separate.

But I share Wilkinson's concerns about "Thomas Friedman things".

Brian Wansink and David Just, two of the academics on whose work Bloomberg leaned when pushing his ban on big soda cups, warn that their work really can't justify Bloomberg's ban; people forced to consume less than they'd like tend to compensate on other margins. Canada's Dan Gardner disagrees, suggesting changes in social norms coming from the changed cup size can, in the longer term, change consumption:

It wasn’t so long ago, remember, that no one expected to be able to buy 64-ounce soft drinks. Or even conceived of such a thing. If “mega jugs” were to go the way of leaded gasoline, the banning of which was also fought and resented, they would some day be forgotten. Like leaded gasoline.

It's an empirical question whether the ban winds up affecting anything. But there's a categorical difference between bans on leaded gasoline and bans on large soft drinks. Leaded gasoline increases concentrations of environmental lead and imposes harms on others; bigger drinks at the cinema might make a bigger mess if spilled on a non-drinker but otherwise only really affect the drinker.

If the state has no place in the bedrooms of the nation, why does it get a seat beside me in the theatre?

Obesity and Impulsivity

Blaming the victim, perhaps. But a new paper suggests personality traits correlate strongly with obesity outcomes. [HT: @bakadesuyo] They find very strong correlations between neuroticism and obesity, and between low conscientiousness and obesity, concluding:

Obesity is a major public health crisis that has multiple antecedents. Certainly many factors, other than psychological, have contributed to the recent societal increase in weight. Yet, even after controlling for major demographic and genetic risk factors, personality traits remain significant predictors of adiposity (Chapman et al., 2009; Terracciano et al., 2009). In fact, personality has an effect on BMI that is of similar or greater magnitude than that of socioeconomic status (Chapman et al., 2009) or the FTO-variant (Terracciano et al., 2009). The cognitive, emotional, and behavioral patterns associated with personality traits likely contribute to unhealthy weight and difficulties with weight management. Identifying the personality traits associated with obesity may help to elucidate the role of personality traits in disease progression.

My first worry is that being obese may generate measures of neuroticism (anger, for starters); fatalism consequent to poor obesity outcomes also could generate low conscientiousness. In other words, it's then hard to exclude reverse causation. But, they also run a few tests on whether personality traits predict weight gain, finding:

In the HLM analyses, the emotional aspects of impulsivity—N5: Impulsiveness and E5: Excitement-Seeking—were consistently associated with greater weight gain over time across the four measures of adiposity. Such individuals give in to temptation and seek out highly stimulating environments; food and alcohol may be one form of stimulation. And, in fact, sensation seeking has been linked with binge drinking (McAdams & Donnellan, 2009) and overeating (Davis et al., 2007). Such behavior may, over time, contribute to weight gain.

I worry that nudge or harder paternalistic measures targeting specific outcomes like obesity, or drinking, or whatever manifestation of high impulsivity/low conscientiousness you want to get angry about, wind up having perverse consequence by effectively subsidizing failure to invest in the general purpose personal technology of impulsivity control and conscientiousness.

Want to fight obesity and other bad stuff in the longer term? Come up with a good way of training kids in conscientiousness and impulse control.