Fat tax lax facts

Today’s fat tax news:

A fat tax is being suggested as a possible way to improve the health of New Zealanders by encouraging people to replace some saturated fats with polyunsaturated fats.

Some butter could be replaced with grapeseed or safflower oil, meat with omega-3 rich fish, and potato chips with nuts or seeds, while the tax could add $1 to a pack of butter.

Rachel Foster and Associate Professor Nick Wilson from Otago University in Wellington looked at five meta-analyses to estimate how the risk of cardiovascular disease could be reduced by eating less saturated fats.

They also used data from the New Zealand Adult Nutrition Survey 2008/09 to determine whether a change to the amount of fat eaten would be warranted and feasible.

Their conclusion was that replacing 5 per cent of daily energy consumed as saturated fat with polyunsaturated fats would be expected to reduce cardiovascular events by about 10 per cent.

This news report, and others on the newly published article from the Australian and New Zealand Journal of Public Health (paywall), makes two statements:

• the tax adds $1 to a pack of butter
• changing the fats would reduce cardiovascular (CV) events by 10%.

Now, if you aren’t careful, you might think these two statements are related. They aren’t. The article, by the way, is the same. It says that a Danish-style tax would add $1 to a 500-g pack of butter. Then, later on, it focuses on switching out the type of fat for 5% of energy consumed.

Let’s connect those two statements.

One way is to go from prices to impacts. Assuming everything works mechanistically, what is the CV events effect of a Danish-style tax?

• Price of butter: $5 (range on-line: $4-$6)
• Tax: $1
• Proportional change in price: 20%
• Elasticity: assume -0.5 (see here, Table 1)
• Proportional change in butter consumed: -10%
• Energy as saturated fats: 13% (from Foster and Wilson)
• Reduction in energy from saturated fats: 1.3%
• CV events effect: 2.6%.

Yes, this assumes that the decreased butter is replaced by the required poly-unsaturated fats, but I’m assuming that for the sake of argument. My point is that the $1 tax wouldn’t lead to a 10% drop in CV events, but something closer to 2.6%, even if it worked as advertised.

We can also do the exercise in the other direction:

• CV events effect: 10%
• Change in butter consumed: -38% (that is, 5%/13%)
• Tax: 77%
• Price of butter: $8.85.

There’s a headline for you: Public Health Academics Propose $9 Butter.

UPDATE: The Manawatu Standard talked to me about the Foster and Wilson article, and shared my estimate of the price impact.