Future Now
The IFTF Blog
How much is that hot dog in the window (tax included)?
I was at dinner at a friend's house recently, and he was expounding a persuasive argument in favor of taxing junk food. After all, he pointed out, taxing tobacco has been a successful public health effort. I tried to remind him that tobacco use is still the number one cause of preventable deaths in this country, but he was right that smoking rates have declined, due largely to increases in the costs of tobacco products, part of which is attributable to taxes (according to Professor Frank J. Chaloupka's ("The Economics of Smoking").
It turns out that my friend is not alone in advocating for a tax on junk food. One of my colleagues (who, in this case, shall remain nameless) is a reticent blogger but an avid tweeter (follow us at @iftfhealth), and today I am the beneficiary of that phenomenon. Her tweet, "Taxing Junk Food Could Stem Obesity Better Than Subsiding Healthy Food," led me to a news release from the University of Buffalo.
Researchers at the university's Division of Behavioral Medicine found that when they increased the price of junk food (hot dogs, potato chips, Ritz Bits Peanut Butter Sandwich Crackers) by adding a 12.5 percent to 25 percent tax, their test subject "shoppers" bought fewer of these products, and spent a larger portion of their budget on healthier choices. Interestingly, lowering the price of healthy foods did not result in the shoppers using their savings to buy more health products. Instead, they used the money they saved to buy more of the less-healthy option.
Observes Leonard H. Epstein, PhD, UB Distinguished Professor of Pediatrics and head of the Division of Behavioral Medicine:
Taxing high-calorie-for-nutrient [HCFN] foods had the dual benefit of reducing purchases of these foods while increasing purchases of low-calorie-for-nutrient foods [LCFN] with lower energy density.... If policymakers aim to reduce consumption of HCFN foods to control rising rates of obesity, then taxing these foods may be more effective than subsidizing LCFN foods.
And, of course, let's not forget the other benefit of taxing anything, especially high sales volume products such as junk food: "From a public-policy standpoint, this strategy had the additional benefit of generating significant tax revenue."