Fat taxes — what’s the goal?

19/03/2013 § 4 Comments

Andrew Dickson (othersideofweightloss) was emailing me about fat taxes and I realised I didn’t have a well thought-out opinion on them. Let me start by asking, what are we trying to accomplish?

User pays — This is the point of the tax on fat people that Gareth Morgan Investments suggested in 2005:

Government could publish a range of tolerance for body mass index and those who fall within that over the year (certified say six monthly, bit like a VIC for a car), would qualify for a lower rate of personal tax (higher rate of benefit).

The idea is that fat people make themselves fat, and their fatness costs the public health system money, which is contrary to user-pays, so we need a fat tax to correct this.

If we accept this idea — fat is like cigarettes and alcohol, two products for which we already have a cost recovery scheme — then we need to keep going. First, we need to understand the full lifecycle healthcare costs of fat people compared to other groups, a point that Eric Crampton also makes. The comparison with smoking and alcohol is instructive: dying early is not necessarily a drain on the healthcare system.

Secondly, user-pays cuts both ways. We are told that fat people are fat because they aren’t active enough. Therefore, they aren’t using a whole bunch of services that the skinny, fit people use. So, yes, we could charge more for their use of health services, but they also get a rebate for the things they don’t use: backcountry huts, footpaths, etc.

Cost to society — This is more than just the strict healthcare costs. Jim Mann, Professor in Human Nutrition and Medicine, wrote a 2004 piece for Diabetes New Zealand on How a Fat Tax Can Help Fight Obesity.

debilitating illness and premature death linked to obesity also cause losses to society in the form of lost economic contributions from those who are forced to curtail work or retire early, or die while still in the work force, as well as lost contributions that many retirees make as community leaders and volunteers….

Note that Mann isn’t talking about helping people get the best for themselves, to ‘nudge’ them into behaviours that will bring them higher longer-term welfare. No, Mann is specifically looking at it from the perspective of society, of what the group loses when an individual cannot participate. Because the group loses, it must change the individual’s behaviour. The logical next step is fining people for shirking and jailing them for laziness — where does it stop? And is fat a leading cause of not contributing? I’d have thought that being selfish was far higher on the list, and no one seems to be proposing a fine for that.

Improving individuals’ choices — This options sounds noble — we’re just helping people do what’s best for them. The immediate problem is defining the ‘what’s best’. Economists generally use a neat trick. They assume that what the individual chooses to do is optimal for them. Now, let’s be clear, it is just an assumption, and Joan Robinson showed the circular logic therein. But, what else are you going to assume? There are only two other choices: someone other than the individual (you, perhaps?) have a better sense of what’s best, or that time-inconsistency of preferences means that the individual at some other point in time would have chosen differently for the present.

Improving choices comes down to two things: improving information and/or overcoming time-inconsistent preferences. Given all the information shoved down our throats for decades (gratuitous foie gras reference), I find it difficult to believe that lack of it is causing 1 in 4 adults to be obese. It’s pretty simple — veggies and fruits >> fried stuff. The time-inconsistent preferences angle is more plausible and interesting. But again, given all the existing ways that people can motivate themselves to be less fat, how much more can people in the present be disciplined by their future selves?

So, why fat taxes? The explanations offered don’t really stack up. We have to look someplace other than economics to understand the motivations. Take your pick of explanations — Foucault and Lacan immediately come to mind — but that’s a topic for another day.

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§ 4 Responses to Fat taxes — what’s the goal?

  • jasllegend says:

    I believe it’s a combination of economics and personal desires. For instance, there are so many ways to help reduce weight but most people are lazy and unmotivated = The fattest country on the planet. There are also many goods in the market that try to advertise to people because they know they are lazy. Nice article

    • Andrew says:

      Is not life a combination of economics and personal desires? The tricky bit is understanding the disconnect between economics and desire! The comment “most people are lazy and unmotivated” is too dismissive, everyone is lazy and unmotivated and non-lazy and motivated, more importantly laziness and motivation do not have a good link with BMI. Also NZ is 18th on the list according to BMI, 3rd in the OECD – and that is based on BMI, not fatness (they are very different measures!)

      Great article Bill!

  • JC says:

    Fatness of course implies greed etc, however I like people to have a chew on this pre Pakeha diet reintroduced by Taine Randell to Flaxmere residents:


    Unfortunately the sort of diets eaten by our ancestors are very unlike the modern Food Pyramid.. something that I think explains much of the obesity and diabetes in the Maori population especially.

    It would be a bit tragic if we introduced fat taxes that favoured just those people that could handle modern highly processed food like pasta, bread and introduced sweet fruits.


  • Grant Taylor says:

    I think you’ve touched on the core dilemma of public health Bill – when the rights/needs of the individual clash with the rights/needs of the population. Public health is about populations. Personal health is about individuals. Public health objectives may be irrelevant for the individual; ‘on average’ it is unhealthy to be fat but it is also possible to be fat and healthy. Public health initiatives appropriately targeting one section of the population may do harm to another – people with anorexia are vulnerable to widespread messages that we should eat less and exercise more. No neat reconciliation is possible here.

    Your mention of the motivation of individuals is also interesting in this instance. In most clashes of individual freedom vs community good, the consequences are (at least potentially) fairly proximal to the behaviours and fairly certain: crime and punishment, rudeness and rejection, for example. In health, the consequences are often very distant and far from certain – which is generally a very poor motivator.

    Some willingness to carry the burden of other’s choices is necessary in healthcare, as it is in everything else shared within a community. The alternative amounts to either a loss of freedom or a loss of society.

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