Fat-tax:An Economic Analysis

对肥胖的行动，市场是失灵的。人们对生活方式的认知低估了饮食和锻炼的影响。另一方面,外部性因素有一些优点,外部性因素是卫生保健系统的产物。下面的paper代写范文进行论述。

Summary

A tax on food containing fat (a “fat-tax”) is meant to be a key measure in government policy directed at the issue of obesity. The goal of the study is to assess whether the fattax, or similar taxes, is an effective means for the achievement of the desired end (i.e. the solution/mitigation of the obesity problem). This is critically examined at several levels.

♦ First, there seems to be a lack of reasons to consider overweight or obesity a public problem and hence as something in need of a government action. This is because these phenomena are widely admitted to be products of people’s decisions over their lifestyles: a product of a tradeoff between good health condition and comfortable and enjoyable life. Thus, despite all of its serious health consequences, obesity is not a disease that affects individuals in society at random, but a pathological state of health typical for those who willingly engage in a lifestyle conducive to obesity.

The case for government action against obesity could thus be restored only on grounds of some market failure, of which “an information failure” and “an externality” are considered. The claim that people’s knowledge about lifestyle systematically underestimates the effects of a rich diet and poor exercise is found untenable. On the other hand, the externality argument has some merits as it must be admitted that the cost of engaging in an obesity-conducive lifestyle is external. However, it must be pointed out that it is so in all cases of activities where engaging in it increases health risks, and that such externality is a product of current health care systems. These systems are designed precisely to make the costs external as the health insurance premiums are banned from reflecting, and are thus independent of, the lifestyle of given individual.

♦ On the second level, if the legitimacy of government dealing with obesity is, for the sake of further argument, granted, the focus shifts to benefits and cost of the proposed tax. The benefits lie in either decreasing the weight and health-care cost of individuals (and thus preventing the externality from emerging; the fat-tax works as “deterrent”), or yielding extra revenue that can be used to cover the extra health-care cost brought about by overweight individuals (and thus internalizing the existing externality; the fat-tax works as “revenue-generator”). Both of theses mechanisms are however subject to possible hindrances that may prevent the tax from leading to the elimination of the obesity problem.

As far as the fat-tax as deterrent mechanism is concerned, there are three major slips: a) The likely insensitiveness of the fat consumption to price increases, resulting in relatively insignificant reductions in fat consumption the tax is capable of producing. b) Even if successful, the reduced fat consumption may be substituted by increased consumption of other commodities, resulting in relatively insignificant reductions in average weight. c) Even if weight of an average individual is reduced, it might be brought about by weight losses of people that were not a burden, while affecting only marginally the overweight individuals (who find it hardest of all to give up fat consumption), resulting in relatively insignificant reductions of the burden obesity is imposing in the health-care system. When it comes to the fat-tax as revenue-generator, there is uncertainty about the way the proceeds from the tax will be used.

They can, and are likely to, be used by government either for project entirely outside the health care industry, or, even if used in health care, they can end up financing other issues than obesity-related treatment. Either way, the goal of internalizing the obesity-induced externality would not be achieved. The costs the imposition of the tax would be associated with lie for one thing in the standard economic cost of a tax (the dead-weight loss).

Besides this there are very many factors that might be included, but three further factors seem to stand out as most likely and relevant: a) The tax may increase the cost in other areas of health care by exacerbating the problem of food security (undernourishment), or by causing people to turn to smoking (a well-known corollary of dieting). b) The cost of running and enforcing the system is likely to be substantial due to hard targeting of all products containing fat (much of it home-made) and due to the appearance of black markets and all its corollaries. c) The adjustment cost to the economy that – though a temporary one – may be significant as the tax would initiate restructuring on a large scale. Unwilling to engage in making cardinal estimations and comparisons of benefits and costs, it is nevertheless found instructive for their balancing to overestimation of benefits and underestimation or ignorance of the costs.

♦ On the third level, even if it is supposed that benefits are greater than costs, it is still improper to consider the fattax a suitable policy for mitigation of the obesity problem. This is because the goal could be achieved at a lower cost (i.e. with less distortions and free of many slips) by employing a more direct measure. Namely, if the direct cause of the problem is excessive body weight than it is logical to target and tax directly the excessive weight rather then the myriad of its causes.

♦ It is thus concluded that if obesity constitutes any problem at all, the fat-tax is at most a very clumsy instrument to fight it: the solution must decidedly be sought elsewhere.

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