Ways to End Obesity
Mayor Menino took his first step to creating a healthier Boston by banning sugary drinks and junk food in vending machines back in 2004.
Now, he is banning sodas and energy drinks from all public buildings to prevent obesity and rising healthcare costs associated to diabetes and other side effects of obesity. This ban may prevent government workers and school children from excessive sugar intake, but so what? What about the college students and the young professionals? What about the majority of private sector employees who finds soda and energy drinks in their company’s cafeterias or nearby restaurants?
Just ask any economist and he or she would explain to you that a limited supply means there will be a shortage in the short term, ceteris paribus. When there is a shortage on any good, whether it is soda or potato chips, businesses will adjust their prices upwards to meet the price their customers are willing to pay. It would cost the average college student or worker more money per soda when there are less soda providers. Could the shortage of sodas in public buildings actually stop soda drinkers? Or would the new price of soda change the purchasing patterns of regular soda drinkers?
The problem is, there is soda everywhere! Does the Mayor really think that just because students and workers can’t buy soda in public buildings that the ban would lead to better overall city health? You don’t have to walk far for a soda. There is a CVS, Dunkin Donuts, or MacDonald’s around every corner if you really wanted one with your lunch. These national and international businesses definitely won’t have a shortage and would love the extra customers as a result of banning sodas from public buildings.
So what is the solution? How can Mayor Menino curve soda consumption?
Put a tax on it!
I know, I know, as if we need any more taxes. But before you completely discount this suggestion, consider what are the factors that determine a purchaser’s behavior. If we want people to stop buying sodas so they could be healthier, then we need to understand what makes people stop buying sodas. If location isn’t a determining factor what is?
The real determinant is price. And since Coca Cola would not increase their prices unless they had to, in fear of losing customers, the only way to increase the price of a Coke is to put a tax on it. How much should this tax be? How much more should soda cost before more people start looking for alternatives? The actual quantitative measure is beyond what I can calculate myself, but I’m sure there are consultants out there who would have the software to find a suitable “global” price.
What I am more interested in is how much more does soda have to cost for people to just start drinking water or fruit juice? Or conversely, how much less does water and juice have to be compared to soda for people to drink more water and juice and less soda? Think about how much more you have to pay for a bottle of OJ compared to a bottle of soda. The cost of juice is much higher than the cost of a sode from a vending machine, or a convenient store. If juice cost less, then maybe people would buy more of it. If more people are buying juice over soda, because juice can be seen as a substitute for soda, then we may have a healthier city.
So there are multiple ways to end obesity. You can:
- Ban all sugary drinks and junk foods from public buildings and hope that the “limited” supply of soda will translate to less soda consumption (key word: hope).
- Put a tax on soda to make the drinks pricier so that people would buy less of it and thus decrease the overall sugar intake in the city.
- Reduce the price of juice and other soda substitutes so people could afford to make the healthy decision of drinking juice and water instead of soda.
Of course, in the end, the choice is up to the consumer’s taste- the determinant of consumer behavior that prevents any economists from claiming their quantitative estimations and thus economic policies are 100% correct. Maybe we do need celebrities to endorse coconut water after all!