Blog

Will Fat Taxes Kill You?

That's the tongue-in-cheek title of my article in Townhall.com.  Here are a couple excerpts:

 It is more than a little disconcerting, then, to learn that the mounting number of federal, state, and local policies aimed at slimming our waists may be misguided. The results from a careful literature review recently published in the Journal of the American Medical Association showed that people who are overweight and even a bit obese actually live longer than normal weight folk.

and

The pathologizing of extreme body types by public health professionals, pharmaceutical companies, and the federal government, for example by referring to obesity as an “epidemic”, has added insult to injury. And, it has licensed the actions of those who want to use the power of the government to restrict what we eat. Yet, if being overweight increases your lifespan, is it possible that government mandated fat taxes and soda bans may prematurely kill us?

and

But, if the overweight are living longer than the normal weight, where is the justification for public intervention to control our weight? Indeed, a study published last year in the Journal of Health Economics showed that health care expenditures are lower among overweight as compared to normal-weight men.

I go on to talk about the fallacy of using Medicare and Medicaid expenditures as justification for public intervention.  

Assorted Links

Can Behavioral Economics Combat Obesity?

Obesity is a serious health problem. This article demonstrates that using behavioral economics to guide regulations is both misguided and can be counterproductive to obese and nonobese citizens alike.

That's the conclusion of an article in Regulation by Michael Marlow and Sherzod Abdukadirov.  I have a whole chapter in the Food Police on precisely this topic.

Keep Your Dollars Local. Or Not

One of the bright graduate students in my department alerted me to the graph below - shown on the Keep it Local OK web site (the figure appears to have been taken from this publication).  The figure purports the following.  For every $100 spent at a local business, $73 stays in the economy and $27 leaves.  But, for every $100 spent at a non-local business, $57 leaves the economy.  

Here are my questions:

  • Where does the $100 come from?  If $57 is leaving the economy, where do all the dollar bills go?  If I continue getting my paycheck (that's the $100), then trade must balance.  So the dollars leaving have to equal dollars coming in.  Otherwise, Oklahoma is gonna run out of money!  After all, even in the "buy local" world, $27 appears to be continuously leaving!  Oklahoma doesn't have it's own Fed and isn't printing it's own money.  So, what's going on?  The answer is that the $27 doesn't really "leave" - at least for long.  It must come back when trade balances.
  • What does "leave the economy" mean?  As I just pointed out, it doesn't really leave if trade balances (as it must - businesses aren't giving out stuff for free).  But, even if it "left" - it doesn't "leave the economy" - it just goes somewhere else – to the larger economy.  And, as much as I hate to admit it, there are also some nice people that live outside Oklahoma.  These people also buy things that "leaves" their economy and eventually find their way back to me.  Otherwise, I wouldn't continue to get a paycheck.
  • Are the sizes of the circles drawn accurately?  Right now, the sizes of the pies appear the same.  But, imagine the two circles being two different countries.  Which do you think would be bigger (in terms of GDP)?   So, to make the comparison correct, we need to change the sizes of the pies.  The size of the first "local" pie should be smaller and the size of the second "trade" pie should be much larger.  So “yes” perhaps for every $100 spent, maybe more of that $100 is leaving in the second "trade" pie.  But that’s alright if you’ve got a lot more $100 bills to spend!  

localdollars.jpg