Challenging Dogma - Fall 2009

Tuesday, December 15, 2009

The Fat Tax – A Battle Against Obesity: A Critique and Re-Invention of the Proposed Fat Tax – Kalan Fasoldt

I. Introduction

Obesity in the in the United States has reached epidemic proportions. According to the CDC 67% of Americans adults are obese or overweight. (1) The causes of obesity vary widely from genetic predisposition and medical problems to unequal access to healthy foods and lack of physical activity. So while there are many contributing factors to obesity, consumption data, such as that from the U.S. Department of Agriculture’s Survey of Food Intakes, suggest that dietary habits have been the most significant contributor to the rates of obesity. (2) It has been documented that Americans today eat approximately five hundred more calories per day than thirty years ago and eat out much more frequently. (3) The increased caloric intake comes mostly from foods which are low in nutrients and high in calories. Obesity from overeating can lead to a number of health problems including coronary heart disease, stroke, diabetes, and hypertension. All of these diseases have been known to lead to premature death and decreased quality of life. Recent concerns about the burdens of these diseases have raised questions about which policy approaches might address the issues of healthy eating. (4) It has been estimated that the cost of health care spending on obesity and obesity related diseases reached $147 billion in 2008. That kind of spending imposes costs not only on those who are obese but also on those who are not. It is these type of costs that people do not think about when making their diet and exercise decisions. (5)

One attempt to battle the cost of obesity and promote more healthy diets in an effort to prevent obesity is the so called “fat tax”. Since excess consumption of unhealthful foods leads to many of the causes of death, an additional tax on these foods is an idea becoming part of both political and public health talks. (6) A fat tax is an additional charge placed on food that is deemed unhealthy or high in fat content. Foods that would be subjected to this tax would include soft drinks, snack foods and sweets. (5) It has been suggested that fat in particular is a key nutrient in regards to obesity. (5) In particular, the intake of sugared beverages is associated with increased body weight, poor nutrition, and displacement of more healthy beverages. (6) Therefore, fat taxes are an explicit attempt to change behavior to meet public health goals. (7)

Currently in the U.S., some taxes are already applied to foods and beverages of this nature, but the fat tax would be an additional tax. (5) Forty states already have small taxes on sugared beverages and snack foods. In the past year however, Maine and New York have proposed the use of a larger tax, the fat tax, on these products. (6) Other states are considering this type of tax as well. The fat tax is an attempt to increase price in an effort to provide an incentive to buy less unhealthy foods. It is believed that this will lead to reduced consumption and therefore increased health. (6) The fat tax has been compared to the tax placed on cigarettes which brought down the rates of smoking and death from lung cancer. (8) Some research has suggested that poor dietary choices combined with a lack of exercise cause just as much morbidity and mortality as smoking. (7)

While there is economic evidence to indicate that increasing the price of certain foods causes people to change their consumption behavior based on food-price elasticity and supply and demand (3,5), a fat tax does not take into account the basic principles of human behavior.

II. A Critique of the Fat Tax

While there are many critiques of the fat tax, this paper will focus on three important ones related to social behavior. First, using a fat tax to try to curve the food purchasing habits of individuals is based on the health belief model and rational behavior. Second, the fat tax does not take into account feelings of ownership of one’s own diet and aversion to loss of that ownership. Thirdly, the fat tax does not consider environmental or social factors in regards to the types of diets certain classes of people have.

A. A Fat Tax is Based on the Health Belief Model and Assumes Rational Behavior

The health belief model assumes rational behavior. The HBM implies that decisions about health behaviors are a balancing act, where people weight the perceived benefits of a behavior against the perceived barrier. A person perceived benefits are dependant on the perceived severity of their behavior as well as the perceived susceptibility to any disease or outcome. The HBM assumes that a rational person would associate unhealthy eating habits with a high susceptibility to becoming overweight or unhealthy as well as perceive the severity of the diseases associated with being overweight and unhealthy as high. These two factors would result in the perceived benefits of eating unhealthy as very low. (9) On the other side of the equation, the fat tax is an approach to try and create a barrier between a consumer and unhealthy or fatty foods. (9) Since the barriers side of the equation would weigh more than the benefits side, than it is believed that a person would want to change their behavior of eating badly. However, individuals, especially young individuals, underestimate the risk of disease that result from establishing bad eating habits. (7)

As we have learned, the health belief model also assumes that behavior is controlled. However, it has been documented that self-control is highly over estimated. (10) The fat tax fails to recognize that individuals may be addicted to certain foods in their diet and therefore lack the self control to stop purchasing regardless of price. (7) An addict may not think about the future implications of their current behaviors and not realize that their current consumption increases their future consumption through habit forming. (7) The fat tax presumes that even an addict could be “rational”; that in the face of higher future prices they would reduce their consumption today by acknowledging that consumption in the future would be more costly. (7) This is also known as projection bias in which people tend to overestimate how alike their future preferences will resemble their current preferences. (11)

The assumption that the fat tax will act as a barrier based on the health belief model is unrealistic when measured against the true behaviors of people.

B. The Fat Tax Does Not Take Into Account Feelings of Ownership About Diet

People feel a sense of ownership over the decisions they make, especially those pertaining to personal habits. This is known to be true in the case of smokers. Many smokers feel an ownership of their addiction and are not willing to give it up without receiving something of greater benefit that is important to them.

Once you have possession of something, for example the ability to choose your own diet, you do not what to let go of that ability to choose. If you are asking a person to change their behavior, as the fat tax is, you are asking someone to give up ownership of something. It is not with rational thinking that one will give up ownership. The fat tax is an attempt to take away a persons ability to choose for themselves what kinds of foods to include in their diet. The fear of loosing ownership of one’s diet can prompt irrational behavior as well as aversion to loss. There is evidence that people can experience aversion to loss for goods they never owned, such as choice options that were merely considered part of decision making. (12) The finding that people place more value on giving up an item than on receiving the same item has also been shown. (12)

Since the fat tax does not take into account loss aversion and ownership, it drastically underestimates the fact that people might be willing to pay more for something they don’t wish to give up. This is especially true since the fat tax does nothing to offer something in return for change in behavior other than improved health.

C. The Fat Tax Does Not Consider Environmental or Social Factors

The fat tax is a regressive tax which impacts on the poor more than the well off, as the proportion of household budget allocated to all foods tends to decline with increasing income. (5) Also, the impact of a fat tax would fall directly on the poor, non white people who tend to be the most avid consumers of soft drinks and the most sensitive to price. (8) It is also known that any “sin” tax is likely to be a burden to the poor since they are the most prone to unhealthy behavior. (8) One of the goals of the fat tax is to encourage consumers to switch to more healthful beverages. (7) However the average price of juice and milk can be two to three times the price of soda. Healthy eating costs more. According to Dr. Adam Drewnowski, director of the Center of Public Health Nutrition at the University of Washington, it is easier for low income people to sustain themselves on junk food rather than fruits and vegetables. (13) Based on his findings, a 2,000-calorie diet would cost just $3.52 a day if it consisted of junk food, compared with $36.32 a day for a diet of low-energy dense foods. However, most people eat a mix of foods. The average American spends about $7 a day on food, although low-income people spend about $4. (13) Dr. Drewnowski goes on to say, “If you have $3 to feed yourself, your choices gravitate toward foods which give you the most calories per dollar. Not only are the empty calories cheaper, but the healthy foods are becoming more and more expensive. Vegetables and fruits are rapidly becoming luxury goods.” (13)

Not only would the fat tax disproportionally affect the poor and non white, it also assumes that all people have access to healthy food which they are to substitute for the heavily taxed junk food. According to an article in Newsweek, new research from the University of South Carolina's Arnold School of Public Health shows just how unhealthy the country life can be. The study, which examined food-shopping options in Orangeburg County, N.C. (1,106 square miles, population 91,500), found a dearth of supermarkets and grocery stores. Of the 77 stores that sold food in Orangeburg County in 2004, when the study was done, 57—nearly 75 percent—were convenience stores. Grocery stores, which stock far more fruits and vegetables than convenience stores, are often too far away. Only 28 percent of all the stores in Orangeburg County carried any of the fruits and vegetables—apples, cucumbers, oranges, tomatoes—that were part of the survey. So while the fat tax attempts to get people to buy healthier foods, sometimes the buying part is not that simple. (13)

In conclusion, it is unfair for a tax on unhealthy and fatty foods to affect certain groups of people more than other groups of people. This is especially true since this tax disproportionally affects the poor and minorities who may only be able to sustain themselves on low nutrition food choices. Also, if individuals do not have the option of accessing healthier foods in replacement of fatty ones, it is unfair to tax them as well.

III. A New Approach to the Fat Tax

Given the critiques of the fat tax, the following is a new approach to the fat tax. The proposed new approach would be a reframing of the fat tax to appeal to individual’s core values using the Advertising and Marketing Theory. Also, it will account for irrational behavior as well as social and economic factors which influence food choices.

A. The New Intervention

The new approach to the fat tax would still preserve the basic tactic of taxing unhealthy and fatty foods. This is in an effort to increase health and decrease obesity as well as diseases associated with being obese or overweight. According to data a tax of this nature could be very successful. For example, when looking at the tax placed on cigarettes, an 8- to 16-cent tax increase would encourage from 1 to 2 million young persons and 800,000 to 1.5 million adults to quit smoking or not to start. Thus, a tax increase could prevent hundreds of thousands of premature smoking-related deaths, while a tax decrease would contribute to the disease burden of tobacco. Intentionally or inadvertently, the federal cigarette excise tax is a powerful tool of public health policy. (14) However, the proposed fat tax has had some issues gaining public acceptance. So the new intervention calls for the fat tax to be re-vamped to gain public acceptance and even support.

One of the difficulties of implementation of only a fat tax is that the level of taxation necessary to encourage people change their eating habits would be high. (5) Therefore, the intervention includes a media campaign that will be aimed at appealing to the core values of individuals. The media campaign will include a series of commercials and advertisements which depict images that appeal to core values. (15) Core values include family, tradition, youth, attractiveness, acceptance, love and happiness just to name a few. When it comes to eating habits, one of the most important core values is attractiveness, as our bodies are often the result of our eating. One study showed that when people were asked to identify their most common motivation for eating healthier, people responded “difficulty fitting into clothes” more often than “health concerns”. (2) In a survey on body image, weight, and diet of college students, the results showed that 54% of the subjects were dissatisfied with their weights, women more so than men. All of the overweight women and men desired to be in a lower weight category. (16) Therefore, it is important that the promise of the advertisements be a big one; if you are in control of your eating habits and choose to eat healthy and you’ll be in shape and be attractive. (17) To support this promise, the advertisements will focus on everyday people achieving personal fulfillment through choosing to eat healthy. (15)

By using the principles of the Advertising and Marketing, the needs and desires of the public will be considered. Using the described types of advertisements and commercials, the fat tax will be redefined and framed in such a way that satisfies an existing demand among the target audience. (15)

The effects of the fat tax depends on whether the tax is designed to reduce consumption, generate revenue, or both. More importantly, whether the revenue is earmarked for programs related to nutrition and health. (6) A fat tax has the potential to generate an enormous amount of revenue. For example, in the case of soft drinks, if one were to tax a penny per ounce, this would raise an estimated $1.2 billion. (6) Therefore, in addition to the advertising and marketing campaign, the intervention would also require that the revenue generated by the fat tax be used to subsidize the price of healthy foods, such as fruits, vegetables, and whole grains. According to a study published in the Journal of the American Dietetic Association by the University of Washington, the cost of fresh fruits and vegetables is increasing faster than the cost of other foods. (18) In addition, the revenue could be used to fund future media campaigns and pay for health promoting programs, and exercise equipment. The popularity of proposals such as the fat tax increases greatly if revenues are used for programs to prevent childhood obesity, such as media campaigns, facilities and programs for physical activity, and healthier food in schools. (6) A poll of New York residents found that 52% of people supported a “soda tax”, but that number rose to 72% when respondents were told that the revenue would be used for obesity prevention. (6)

B. Support of Intervention

1. The intervention is Based on the Advertising Theory and Does Not Assume Rational Behavior

The decision to choose healthier foods over fatty foods is not as simple a choice as it may seem. For this reason the intervention is based on the Advertising Theory rather than the Health Belief Model. The Advertising Theory accounts for the irrational behavior of human beings as well as acknowledges the desires of its audience. Instead of assuming that people will weigh the costs and the benefits of eating healthy and then go on to make the “right choice” as the Health Belief Model does, the Advertising Theory recognizes that people don’t necessarily think in that way. The Advertising Theory makes emotional appeals instead of rational ones. In addition, the Advertising Theory uses dramatic stories instead of lecture, which is the opposite of the principles of the Health Belief Model. (19)

Initially, the fat tax was a tool used to promote health instead of obesity and obesity related diseases. As we have learned, health is not a core value that heavily influences the choices we make. In addition, the intervention is about delivering a positive message instead of one that invokes fear appeals about risky health behaviors. (20) The Advertising Theory uses the core values of attractiveness and control in the intervention, which is much more likely to influence a person’s food choices.

An important part of the Advertising Theory is the source of message and promise. (19) Currently, the fat tax is being explained and supported by legislators and politicians. (8) Using the campaign and advertisement suggested in the intervention, the source of the message changes to a source people are more likely to relate to and identify will and strive to be like. This enforces the promise of the advertisements. By using the Advertising Theory instead of the Health Belief Model, the advertisements are used as a tool to entice people to make the simple decision to eat healthier foods with the belief that that decision will be rewarded. Initially, the fat tax was meant to act as a barrier in the decision to eat unhealthy food.

2. The New Intervention Accounts for Ownership and Aversion to Loss

The intervention allows people to feel in control of their decision making by using advertisement that doesn’t talk about the fat tax itself. The fat tax is seen as an attempt to take a part of someone’s diet that belongs to them. The advertisements used in the intervention indicate that eating healthy is a choice, and that by choosing to eat healthy one can be in control of their life. This frames eating healthy as a choice, while the fat tax seemed like a way to force people into making choices they didn’t want to make. By providing the illusion of control, the choice to pick healthier foods is of more value to someone who does not have this same control. Also, this provides motivation to avoid the negative consequences that accompany the perception of having no control, or in this care choosing to eat unhealthy foods. (10)

The other part of ownership is loss aversion. However, by using the revenue to subsidize the price of healthier foods people receive something in return for the increased prices of unhealthy food. People are less averse to loss when they are promised something in return. As the data showed in the first part of the paper, people were more in favor of the fat tax when the revenue would be used to promote health.

3. The New Intervention Accounts for Social and Environmental Factors

As mentioned in the earlier in the paper, the poor are disproportionately affected by prices of foods. The prices of food influence their food purchasing behaviors. Often the poor are forced into buying less nutritious food because it simply costs less than healthy foods. The poor traditionally spend a larger percent of their income on food and the fat tax would only negatively affect this fact. (21)

By subsidizing the price of healthy foods, such as fruits and vegetables, it allows people with low incomes to afford a better diet and make more choices for themselves and their families. Studies have shown that subsidizing healthful meals and educating consumers about the importance of a healthy diet can result in a modest increase in the selection of healthy foods and meals that can be maintained beyond the periods of subsidy and promotion. (22) This especially important since it is the poor and minorities who are affected the most by diet related diseases. Since this is the case, those of lower incomes would probably derive the greatest benefit from the ability to reduce their consumption of unhealthy foods by being able to buy healthy ones for the same if not lower price. (6)

In conclusion, the focus on the fat tax may be misplaced. The intervention recommends pricing policies that have the dual impact of discouraging key behaviors and encouraging other. This is done through the use of a mix of both taxes and subsidies. (4)

IV. Conclusion

The fat tax is unlikely to be implemented or gain public support as an effort to discourage unhealthy eating habits by created a barrier between the consumer and the food product. The fat tax assumes food choices and behaviors are rational and that people are in control of those choices. Additionally, a tax on fat would place an unfair burden on the poor. If the approach to the fat tax was tailored using the Advertising and Marketing Theory and uses it’s revenue to subsidize the cost of healthy foods and health programs, consumers would feel in control of their food behaviors and be able to afford the healthy foods they wish to purchase and increase their knowledge about healthy eating habits and physical activity. With these changes, the fat tax has a better chance of being successful as a tool to decrease obesity and obesity related diseases.


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