Transfat Ban

No doubt most of you have heard by now of the FDA's plans to ban transfats .  I've had a few reporters ask about my thoughts on the issue, so I thought it would be useful to pass them along here.

First, from my reading of the research (and I will admit to being no expert on the issue), it does seem that consumption of "synthetic" transfats have deleterious health effects.  Interestingly, however, a few studies show that "natural" transfats from animal sources may not be as unhealthy, despite having similar chemical compositions as the "synthetic" transfats.  

The question before us isn't whether certain transfats are unhealthy - they are - but rather: what is the government's role in regulating transfats?  The move in recent years to educate the public on the scientific evidence, and even to require labeling of transfats on nutritional facts panels, is reasonable in my opinion given the established safety risks.  And indeed, almost every story I've read on the issue shows that these efforts alone caused a significant voluntary drop in use and consumption of transfats.  The trouble comes when some third party - the FDA in this case - moves from informing public about risks to making the decision for us.  The government has moved from the role of impartial referee conveying the rules of the game to a player in the game picking sides.

Many of the news stories point to the number of "lives saved" if a ban on transfats were implemented.  But, this is misleading when discussed without context.  We could save many more lives each year if the government banned driving.  Many lives could also be saved if we banned alcohol and went back to prohibition.  Skydiving is risky - why not ban that too?  The reasons is that many risk activities convey benefits to the public that must also be considered.  

What are the benefits from the use of tranfats in food?  Taste.  Mouthfeel.  Cost.  Improved shelf life.  What would be the costs of removing transfats?  Higher food prices.  Manufacturers may have to add more sugar or salt or more saturated fat to compensate for the loss of transfats.  The point is that any discussion of the benefits of a ban on transfats must be considered in the context of the costs of the ban.

Even if a ban passed a narrow cost-beneft test, I think we'd also want to ask whether the infringement on freedom of choice can be justified on logical grounds.  Stated differently, where is the market failure? Normally, economists identify market failures if there are price-altering market powers, externalities, public goods, or information asymmetries.  Only the later of these, in my opinion, has any credibility, but with the existence of labels, even that is no justification.  That leaves only one primary motive for the ban: the dim view that the public is unable to properly weight the risks themselves and are in need of paternalistic intervention.  Of course, government officials won't come right out and tell us that their motivation is our perceived ineptitude  because we'd rightly rebel against such a condescending attitude.       

One last point: it seems pretty clear that the provision of information via labels, and resulting consumer demands, induced innovation by food companies to come up with ways to do without transfats.  But, is it possible that a ban could hinder innovation?  As I've already mentioned, all transfats are not created equal.  Is it possible for scientists to develop new fats that convey some of the same beneficial properties as existing "synthetic" transfats without the health risks?  I don't know.  And we may never know if we institute a blanket ban.