Michael Bloomberg and David Paterson announced a proposal yesterday to ban the purchase of soda with food stamps. It is sure to be controversial, but is it a good thing?
At the very least, if the government is determined to try and reduce decrease public expenditures on health care by reducing soda consumption, than this is a preferrable approach to a soda or sugar tax. A first best approach would be to tax individuals who a) are drinking enough soda that it increases their risk of illness, and b) with some probability part of their health care costs will be born by public.
Since foods stamp recipients seem like a likely target for b), this at least meets one criteria. In contrast a general soda tax falls on everyone, and meet neither criteria. Even with the more targeted food stamp approach, people whose soda consumption is at safe levels or who have private insurance will be inefficiently restricted by this.
I have not looked at the data myself, but the conventional wisdom and the contention of the proposed law is that a) is very much true.
The whole discussion of course presumes that the law actually reduces soda consumption. For one thing, if individuals are paying some non-soda food costs with cash they can just shift to spending that cash on soda. There are also ways to trade around this: I buy $10 worth of soda with cash, you buy $8 worth of food with food stamps, and we trade. In either case though, transaction costs have been raised, although in the former the amount may be very slight.
Another problem is that individuals may respond to the lower calories by simply consuming more calories. While researching the health effects of soda for my recent defense of diet soda, the literature appeared mixed as to whether switching from regular to diet soda caused weight loss because of the calorie substitution problem. Perhaps Karl will chime in on this; he is much more knowledgeable about all things obesity.
The final question to ask is whether this policy is simply too paternalistic? I have to say I don’t think it is. Food stamps by themselves are already highly paternalistic. Essentially they tell low-income people that on average they will not spend cash in a way that best benefits them and their family. The government defines a subset of goods and tells them “you will be better off if you stick to these goods instead of buying what you want”. The marginal paternalism of reducing the size of the goods the government allows is slight compared to the paternalism food stamp recipients are already enduring. If your significant other tells you that you have to go to bed between 9:30 and 10 that is highly paternalistic. If they further refine that and decide it has to be between 9:40 and 10 it’s not that much more paternalistic. Perhaps this graph will help:
Another issue that you are free to reject, as it just reflects my diet soda bias and my love of delicious aspartame, is that I suspect much of the continued preference for regular soda over diet soda despite the health advantages is motivated by a lack of understanding of the safety of diet soda. Fear not New Yorkers, despite the email chain letters and urban legends, diet soda is not bad for you.
Overall though we should be weary of this kind of paternalism, and the desirability depends on how effective it would actually be. However, given the high level of paternalism in food stamps already I don’t consider this marginal paternalism to be that troubling.
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Friday ~ October 8th, 2010 at 11:06 am
Corey Mutter
I actually like Splenda-sweetened soda flavor more than aspartame-sweetened. I gave up calorie-containing drinks during a time in my life when I was on a calorie-counting diet (“Hacker’s Diet”). Never did go back.
So now I will get a diet soda, and a candy bar, from the break room.
Friday ~ October 8th, 2010 at 1:46 pm
Melanie B
Food stamps are much less restrictive than I believe you assume. These are the only items NOT eligible for food stamp redemption:
Beer, wine, liquor, cigarettes or tobacco
Any nonfood items, such as:
– pet foods;
— soaps, paper products; and
— household supplies.
Vitamins and medicines.
Food that will be eaten in the store.
Hot foods
If you provide low-income individuals and families with vouchers to purchase foods, especially if those individuals also receive Medicaid or other gov’t-subsidized medical care, it is totally counter-intuitive to allow the use of such vouchers on items that do not assist with nutrition (as the mission-in-the-name clearly states). It is commonplace (and studies indicate such) that individuals use food stamps to purchase less-nutritive foods, and there are many additional gov’t programs in place ENCOURAGING these individuals to use their benefits in a more healthful way. If the government (rightly or wrongly) is providing these vouchers, then they should be allowed to determine how those vouchers can be used (WIC is already doing this, and it is very, very restrictive).
Friday ~ October 8th, 2010 at 4:21 pm
Food Stamps and the Excess Cash Balance Mechanism « Modeled Behavior
[...] Food, Left, NYC, Ozimek, paternalism, Stamps, Twitter | by Niklas Blanchard Riffing off of Adam’s post on the NYC food stamp decision, I have found it useful to think of the issue through the lens of [...]
Wednesday ~ October 13th, 2010 at 10:16 pm
Ryan Vann
From a strictly cost savings perspective, why encourage healthy behavior among net benefit receivers? Extending their lifespans means more years of SSI income, and probably more years of end of life care. I doubt some nagging heart issues would counteract those costs, though kidney issues may well. More than anything, being old is expensive. In my cost reduction world, stamps could only be spent on malt liquor, tobacco, and Cheetos.
As for being too paternalistic, why not ask the folks receiving said benefits? Seems they’d have more first hand knowledge of it.
Wednesday ~ February 29th, 2012 at 3:40 pm
Should We Restrict Food Stamps to Healthy Food? » Meslema
[...] This doesn’t seem like much of a dilemma, unless you think that favoring drug legalization, and selling heroin, are morally equivalent. Not, mind you, that I mean to imply that fatty foods are just like heroin. But it doesn’t seem like some sort of crazy stretch to believe that 1) People should be free to buy fattening foods without government interference 2) The government shouldn’t necessarily pay for those foods. Myself, I think this sort of nannying is mostly pointless; if you want to help the poor, give them cash, and if you don’t, then leave them alone. But if we are going to have a food stamp program, that implies exclusions–things like laundry soap are already verboten from the program. It’s not especially crazy to put unhealthy food on the excluded list. (Graph via Adam Ozimek) [...]