An Interview with Meatingplace

The latest issue of Meatingplace magazine features a cover with yours truly.  ​The inside (gated; but free to those who register) contains an interview I had with the editor and it mainly focuses on my book The Food Police, which comes out April 15.  

Here are a few excerpts from the interview:​

Meatingplace: Why did you decide to write "The Food Police" and whom are you hoping to reach?

LUSK: This book is for anyone who watches the Food Network, anyone who has read (Michael Pollan's) "The Omnivore's Dilemma" or watched "Food Inc." I wrote this book because I feel the state of food and agriculture is being distorted and there needs to be a voice out there countering a lot of what was being presented. I describe a lot of what's good about agriculture, and I describe a lot of the unintended consequences and sometimes outright craziness of policies that have been proposed.

and

Meatingplace: What is your view on the local food movement?

LUSK: I have a bit of a nuanced view. I fully support farmers markets and supporting local farmers. What I take issue with is this idea that somehow this activity in and of itself is virtuous and that it should be subsidized by farm-to-school programs. There are people like Michael Pollan who say we should have rules that schools and hospitals that receive public funding have to source a certain percentage of their food from a certain radius. I take issue with this sort of regulation of localism.

and

Meatingplace: What is your take on the politics of food regulations?

LUSK: We have a culture in which the consumer's first thought when there's a problem is to turn to the government rather than the people selling them the product. That's a problem.

A lot of politicians and a lot of the people we call the "food police" have good intentions. It's just that they don't think about the consequences or at least appreciate some of the unintended consequences. And they don't have the knowledge of the industry to know how these things are going to work out.

We all want safe food. We all want high-quality food. And I think part of what I'm trying to do by writing a book and other things is to try to help them understand that the market helps provide those things. 

There's quite a bit more in the magazine.​

Fat taxes may be even less effective than previously thought

An article that just appeared in the most recent issue of the American Journal of Agricultural Economics by Yuqing Zheng of RTI and Edward McLaughlin and Harry Kaiser of Cornell University presents some interesting thoughts regarding fat and soda taxes.

Most of the studies on fat and soda taxes use elasticities of demand to simulate the effectiveness of a tax.  The elasticity of demand tells us how responsive consumption of a product is to a change in it's price.  So, for example, an elasticity of demand of -0.6 would tell us that for every 1% increase in price, consumption would fall by 0.6%

Zheng and colleagues point out, however, that most people don't "see" the tax when they're shopping.  It only shows up on the bill when you check out.  As such, it is incorrect to directly use the price elasticity of demand  ​to infer how consumption of soda or fatty foods will change after a tax.  

They show that an excise tax (​which is levied on the supplier rather than the consumer) is probably more effective at reducing soda (or fat) consumption than a retail sales tax, but even excise taxes are likely to to be less effective at reducing consumption than an equivalent price increase.  

As a result, researchers need to adjust the demand elasticities before calculating the effects of a soda or fat tax (regardless of whether the tax is excise or retail).  Yet, almost no one does this.  The researchers show, however, that the required adjustment can be fairly dramatic.  In their "baseline" scenario, they show that the elasticity of demand needs to be reduced by a factor of 0.14.  So, if the elasticity of demand was -0.6, then we'd project a 1% increase in sales tax would only reduce consumption by 0.6*0.14 = 0.084%.  Instead, previous research on this topic has applied the original elasticity (e.g., 0.6) rather than the adjusted elasticity (e.g., 0.084).  Clearly, the adjusted elasticity will imply much lower effectiveness of the tax.

The authors conclude:​

Therefore, even a large increase in the sales tax rate on food and beverages will only reduce demand by a moderate degree.

and

our analysis of sales and excise taxes offers some explanation (e.g., imperfect tax knowledge, slow learning) on why the impact of sales tax is so difficult to detect, thus bridging the gap between the simulation studies and the empirical findings

The South Isn't Fatter than the Rest of the US; Just More Honest

For years now, the CDC has been putting out figures showing state-by-state changes in the prevalence ​of obesity over time (e.g., scroll down to the bottom of this link).

It turns out that these state rankings are inaccurate.  That's according to some new research just published by researchers ​in the journal Obesity,  

Apparently, the CDC maps were created based on weight information collected from telephone surveys.  It has been known for a long time that people tend to under-state their weight when asked on a survey as compared to objective, physical measures taken with a scale.  

What appears to have largely gone unnoticed is that there are systematic differences in the extent to which people in different areas of the country under-report.  When you look at self-reports from phone surveys, the states in the east south central census region (Kentucky, Tennessee,  Alabama, and Mississippi)​ appear to be the fattest (ranking 1st out of 9 census regions according to the BRFSS survey).  BUT, when one looks at actual measured weight, they only rank 5th or 7th depending on which data source you use.  

Minnesota and Missouri were only ranked 17th and 19th based on self reports but they rose to numbers 1 and 2 based on actual measurement.​

The authors find that the correlation between state-rankings across two data sets (one based on self-reports another based on actual measurements) was only 0.30 and not even significantly different from zero.  

All this begs the question: why do some areas of the country under-report their weight more than others?  I'm sure there a many potential explanations in addition to the one I hypothesized in the title of this post.  

Robert Frank on Soda Taxes

A couple days ago, the Cornell economist Robert Frank weighed in at the New York Times on Bloomberg's soda ban.  

The first part of the article is mainly about negative vs. positive freedoms.  Frank wants the government to guarantee ​positive freedoms (how many, I'm not sure) whereas I'd prefer the government primarily focused on guaranteeing negative liberties.  This is an old debate (I'm reminded of the chapter in Hayek's Road to Serfdom where he talked about the successful efforts to redefine the word "freedom.") and although I disagree with Frank, I at least understand where he is coming from (aside from the ad hominem connections between soda and tobacco).

What confuses me (because he's an economist) are Frank's economic arguments for a soda tax.  ​

In the 2nd to last paragraph he says:​

The case for reintroducing such a proposal is strong. We have to tax something, after all, and taxing soft drinks would let us reduce taxes now imposed on manifestly useful activities. At the federal level, for example, a tax on soda would permit a reduction in the payroll tax, which would encourage businesses to hire more workers.

​Yes, if we want public roads and schools, we do need to tax something.  But, I would have thought than an economist would argue that we'd want to tax things that create the least deadweight loss. And I would have thought there would be mention that we'd want taxes that are the least regressive (i.e., where the burden is not most heavily paid by the poor).

Maybe Frank is right and we should reduce payroll taxes, but how do we know soda taxes are the solution and are any less distortionary or are more progressive?  And why would soda taxes be the next best alternative to replace payroll taxes from an economic point of view?  Elsewhere, Frank has (very reasonably in my opinion) argued for across-the board consumption taxes in lieu of income taxes; so why now a soda-tax rather than an across-the-board consumption tax? There is no attempt to answer these important questions.     

Yet, he goes on in the concluding paragraph:​

Evidence suggests that the current high volume of soft-drink consumption has generated enormous social costs. So to those who have lobbied successfully against a soda tax, I pose a simple question: How do the benefits of your right to drink tax-free sodas outweigh the substantial costs of defending it?

​I disagree.  We don't know that soft-drink consumption per se has enormous social costs.  We have epidemiological-type studies/simulations based on correlations and assumptions but we don't know much from randomized controlled trials.  We also don't know that the costs (whatever they might be) are social rather than private.  As is well articulated in this article by Jay Bhattacharya and Neeraj Sood published in the Journal of Economic Perspectives when it comes to obesity more generally, the costs are primarily private​. Moreover, the expenses to Medicare and Medicare are really just transfers not deadweight loss.

Frank ends with a question: ​"How do the benefits of your right to drink tax-free sodas outweigh the substantial costs of defending it?"

First, I don't think most opponents of soda taxes would defend "tax free" but rather argue against special exceptions/taxes for one type of food vs another (because, among other reasons, the definition if "soda" isn't all that clear - and there are many substitutes for sodas that may be more calorie dense).  But, more generally, the answer is that the economic research shows soda taxes to have small effects on consumption, yet with large deadweight loss, and no meaningful impact on obesity.  The answer, in short, is that I defend my perspective using economic logic and the empirical results from economic studies.  I'm willing to be persuaded by new evidence or economic reasoning, but Frank didn't offer anything new.  I'm a bit surprised an economist of the caliber of Frank didn't meaningfully engage with economic evidence we do have.   

Do Small Reductions in Caloric Intake add up to Big Changes in Weight?

The answer is: probably not.​

​This is important question because there are many studies finding that various interventions (from fat taxes to menu labels) have very (though sometimes statistically significant) small effects on caloric intake.  Proponents of the policies are often undeterred - and say things like "well, a 20 kcal reduction every day can really add up to big weight loss over time."

As I've already discussed, some of this sort of analysis ​is based on the faulty logic that 3500kcal = 1lb.  But, as was mentioned in that post, our body does not react linearly to caloric changes in the fashion implied by this formula.  

Now, there's more on this topic by Trevor Butterworth in a well-written and catchy-titled post ​Sex And Lies! The Iffy Science Of Measuring Calories.  Here is a key excerpt:  

Hall was responsible for filling in the crucial measurements that elucidated one of the most widespread myths highlighted by Allison et al.: the idea that small, consistent changes in energy intake or expenditure will, over time, lead to large changes in weight. The assumption appears to have been based on the 1958 calculation by Max Wishnofsky that one pound of body fat gained or lost is equal to 3,500 kilocalories. This seemed to give people a convenient way to estimate weight loss through diet or exercise, while promising extremely convenient results. If you simply knocked off a 100 kilocalories from your energy intake each day—a ten-minute jog, or a mile walk—you'd end up losing over 50 pounds in five years. Little wonder that early proposals for soda and fat taxes promised to save Americans from themselves: pay a little more, consume a little less, watch a lot of weight disappear in a few years.

Hall first heard the claim listening to a dietician make a calculation for an obese patient. His intuition told him that this calculation was incorrect and would lead to exaggerated weight loss predictions. When he asked for a reference, he was pointed to a nutrition and dietetics textbook. "I subsequently found the mistake everywhere I looked." People weren't stopping to think "about the dynamic interaction between energy intake and expenditure, which is complicated," he says. What they failed to take into account was that "the rate of weight loss changes over time and is primarily determined by the imbalance between energy intake and expenditure—a value that also changes over time." To radically simplify his model, this means that cutting calories in your diet leads to a decreasing calorie expenditure, which in turn slows weight loss until weight eventually plateaus after a few years. "Of course," says Hall, "cheating on your diet will cause your weight to plateau much sooner." In the case of soda taxes, Hall and researchers at the US Department of Agriculture showed how static modeling overstated weight loss by 346 percent after five years.