Note: Renamed this from “Discussion Thursday” as I ended up inadvertently writing a post rather than a comment …
Sorry, a bit busy to do real posts. Also wanted to get a discussion going on this excellent quote from Eric Crampton about using sugar taxes to pay for the “health care externality” from obesity/sugar consumption:
What happens then if we find that it’s those healthy exercise people who cost the system more, on the whole, because they live longer (costing the superfund) and consume health services over a longer period?
Be careful wanting to tax all the fiscal externalities. You might not like where it leads.
Let me throw up a quick first comment here
He is totally right, if we are consistent and we estimate that obesity kills people more quickly leading to a lower lifetime fiscal bill, then by the same logic we are using to tax sugar we should subsidise sugar. If your argument about sugar taxes is based on these types of externalities, this becomes an empirical question – and if this is the policy line you should be comfortable with the idea that we should subsidise things that lower fiscal burdens by having people choose to die a bit earlier.
This will make a whole lot of people very very uncomfortable – I understand this, the entire language of trade-offs in terms of the length of people’s lives is an ugly one. The key point that makes it palatable is that the choice of life length vs quality is actually up to the individual here – they are choosing what to consume etc. You may well say “that is stupid, everyone wants to live longer and doesn’t know the precise impact of their consumption decisions”. I would respond to this with my witty rejoinder “no s**t”. Or more seriously, I also would really like a new computer and don’t know what the precise impact of the new computer would be on my productivity, exercise routine, life choices, and wellbeing – does this imply that government needs to get involved in my choice to buy a computer?
Yes, there are cognitive issues, power imbalances, and information problems – but our policies should be based on understanding of those, not targeting “obesity” as an output. Such an output frame for considering the issue doesn’t make sense.
However, if we are going to discuss externalities, the fiscal issue is all we really have – it is a stretch to add “lost productivity” or “upset family” as an externality, as there is a “price” associated with each of these. In the first case it is your wage, in the second case it is the shadow price involved in intra-family negotiations. Neither of these are externalities and instead we would have to say there is some “power imbalance” in the relationship so that the individual can go around imposing all the costs on their employer and loved ones without cost – which is getting patently ridiculous.
But then I have to ask, why are people so much more comfortable taxing people on the basis of their sugar consumption? I fear that it sounds like you are merely “moralising” their choice based on what you subjectively view as someone else doing something right or wrong.
If that is seen as a good tack for policy, we are heading down the wrong path. And before you accuse me of saying this because I’m an economist, I’d note that this doesn’t come from my economics training – it comes from the history classes I took at the same time. The discussion of group behaviour and how groups will define their own moral value against an “other” had a strong impression on me, particularly in the race and racism course where we discussed scientific racism.
Some of the best scientists, philosophers, sociologists, statisticians, and (disappointingly) economists in the late 19th and early 20th centuries based policy recommendations on value judgments that inherently bullied minority groups, based on moral judgments that we SHOULD socially value some ideal form.
Now look, if society wants to beat up on people for smoking, drinking, and weighing too much, that is their thing. It makes me angry, but society is a lot bigger than me. However, don’t pretend you are doing so with economics, and basing it on a firm “externality” argument, if ex-ante you can’t see yourself allowing for either subsides or taxes on sugar. If there is an initial asymmetry there you are putting in an extra initial VALUE JUDGMENT(S) about obesity and people who are obese – just be honest about it
Note: I am not comparing the focus on aggregates by disciplines, and the push to “target outcomes”, to the Nazi’s by discussing scientific racism – that would be patently ridiculous. I’m comparing the use of simplified rhetoric, and the willingness to ignore individual agency, some elements of value, and heterogeneity of desire, to what scientific (including social sciences) disciplines have done in the past – and the impact that had on social attitudes and societies willingness to bully minorities, and perpetuate real injustice in the name of social justice.
Our simplified (communicated) arguments form part of the understood base of knowledge for individuals who are making decisions and trying to work within their group. The more intolerance they show, the more our respective disciplines is trying to make society intolerant of difference. This point is far from ridiculous.