Smart People Talk Trans Fats

Gary Becker and Richard Posner take up the economics of the New York trans fat ban. They are both smarter than I am, but I'm inclined to side with Becker.

Says Posner:

A strict Chicago School economic analysis of the ban would deem it inefficient. The restaurant industry in New York is highly competitive, and so if consumers are willing to pay a higher price for meals that do not contain trans fats, the industry will oblige them; to force them to shell out more money, rather than leaving it to their decision, is thus paternalistic, indeed gratuitous.

...

What is missing in this analysis is a cost that, ironically, a great Chicago economist, George Stigler, did more than any other economist to make a part of mainstream economic analysis: the cost of information. It might seem, however, that the cost of informing consumers about trans fats would be trivial--a restaurant would tell its customers whether or not it used trans fats, if that is what they're interested in, and if it lied it would invite class action suits for fraud. But there is a crucial difference between the cost of disseminating information and the cost of absorbing it.

Says Becker:

The prominence of young persons among the big consumers of trans fats, cholesterol, and calories in foods like French fries and big Macs may not be due to ignorance. Rather, they may have an unarticulated awareness that when they reach older ages where heart disease and other diseases are more common, drugs are likely to have been developed that offset the negative consequences of what appears now to be unhealthy diets.

...

With a small taste benefit from the use of trans fats-- the New England Medicine Journal article I cited earlier does admit positive effect of trans fats on "palatability"-- the total cost of the ban would equal or exceed total benefits. For example, suppose 1 million persons on average eat 200 meals per year in NYC restaurants with trans fats. If they value the taste of trans fats in their foods only by 35 cents per meal, the taste cost to consumers of the ban would be $70 million per year. Then the total cost of the ban would equal the benefits from the ban.

Read the whole exchange here, here, here, and then here.

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  • Paul||

    Bah, we're already on the catch-up train...

  • ||

    "Rather, they may have an unarticulated awareness that when they reach older ages where heart disease and other diseases are more common, drugs are likely to have been developed that offset the negative consequences of what appears now to be unhealthy diets."

    LOL! Yes, teenagers are so rational about weighing delayed costs and benefits. And their knowledge of phramaceutial devolopment!

    Yes, professor, that's EXACTLY what's going on.

  • thoreau||

    You know, I'm as opposed to this ban as anybody else, but when I read something like:
    The prominence of young persons among the big consumers of trans fats, cholesterol, and calories in foods like French fries and big Macs may not be due to ignorance. Rather, they may have an unarticulated awareness that when they reach older ages where heart disease and other diseases are more common, drugs are likely to have been developed that offset the negative consequences of what appears now to be unhealthy diets.

    Um, no. For starters, there's no guarantee that such drugs will be developed, or that they will be cheap, effective, and have low side effects. Also, teenagers have ALWAYS engaged in risky behaviors.

    It would be one thing to quote this argument as part of an analysis. But to deem it the smarter of the two arguments? Please.

    I know that it's always popular to declare that a relatively new Reason staff writer is sending the magazine to hell in a handbasket (see: Julian Sanchez, David "Weigal" Weigel), but, my God, Katherine Mangu-Ward, this is unimpressive stuff.

    Oh, and for the record, I want to re-iterate that I oppose the ban on transfats. (Please re-read that sentence as many times as you deem necessary.) That only makes me even more pissed off when I read bad arguments, because they're making my side look bad.

  • ||

    joe,

    You're pretty condescending, although that's par for the course for you.

    You don't need a medical degree (or even a high school diploma) to realize that in 50 years we're going to have better drugs. You just need to live outside a cave.


    Also, that's such a difficult cost-benefit analysis to make. Only mature, erudite folks such as yourself could wisely make that analysis!

    I don't know if many young people think that way or not, and I doubt that you know any better than me. That won't stop you from taking shots at a "right-wing" economist.

  • dhex||

    i'm a bad libertarian and a bad new yorker because i don't really care about transfat bans.

  • Barbar||

    And if you assume that it costs 35 cents a meal to verify whether or not it has transfat in it... well, there goes Becker's sophisticated cost-benefit analysis.

  • The Wine Commonsewer||

    More than likely the real thought process behind consumption of Mickie Dees fries is a shrug. Teens are invincible, they can quit smoking whenever they want, and old age is light years away.

    As Dave Barry once pointed out, if everyone who started smoking developed hemorrhoids within a year, nobody would smoke. The fuzzy long term down side of health matters that may or may not affect you thirty years down the road is difficult to imagine in your mid-teens.

    That's not to dismiss Becker's arguments entirely because kids absolutely understand our brave new world and the real possibility that guys like Ron Bailey will someday grow you a new heart in a petri dish.

  • :-||

    there's no guarantee that such drugs will be developed, or that they will be cheap, effective, and have low side effects.

    No guarantee, certainly, but highly likely. Unlesss you believe everything that might have been invented has been. The era of "wonder drugs" is just beginning.

  • thoreau||

    More than likely the real thought process behind consumption of Mickie Dees fries is a shrug. Teens are invincible, they can quit smoking whenever they want, and old age is light years away.

    Exactly.


    To smiley-face:

    As a scientist I'm very optimistic about technology, but I'm also just skeptical enough to suspect that there will never be an era where you can eat whatever you like without consequences. I could very well be proven wrong on that, but I still exercise and try to eat well (notice the word "try") because the age-old advice of a balanced diet and adequate exercise seems a safer bet than assuming that my colleagues will cure heart disease before I (or even today's teens) reach middle age.

    The possibilities of science are limitless, but even after millenia of innovation we still haven't found any of the following:
    -A fountain of youth
    -A perpetual motion device
    -An alternative to diet and exercise
    -A free lunch
    -A way to persuade teens to think ahead

    I'm as opposed to the ban as anybody else, but to cite Becker's worst argument as the better one, rather than citing some of his other arguments in the long exchange? Please.

  • Timothy||

    You know, I get where Becker is going with this, but I am very, very suspicious of his conclusion. Especially about the rationality of teenagers. I mean, seriously.

    And if you assume that it costs 35 cents a meal to verify whether or not it has transfat in it... well, there goes Becker's sophisticated cost-benefit analysis.

    Adding $70 Million in costs actually makes Becker's point, given that the $70 million "detection cost" would equal the supposed benefits from the ban, if consumers value the taste benefit at anything greater than zero the ban reduces overall utility.

    But that's really far afield from the point, which is that assuming that teenagers of all people are good at making choices about trade-offs through time. Hell, adults aren't any good at that kind of thing.

  • The Wine Commonsewer||

    Thow-row, thanks for the nod.

    I really am convinced that Bailey is gonna grow me a new heart (in fact, I'm counting on it) but in the meantime I've shed some pounds and been walking around the mountain a few times a week.

  • ||

    An alternative to diet and exercise

    Remove HFCS from products. You still haven't realized the power of the individual.

  • :-||

    Just because teenagers listen to really crappy music and seem to enjoy dry-humping each other like horny poodles doesn't mean they are entirely irresponsible and narcissistic. But I'm pretty sure the reason they eat a lot of fast food is because they like the taste. And maybe they are not as pessimistic about the future as your run-of-the-mill Reason libertarian? I'd like to think so.

  • thoreau||

    And maybe they are not as pessimistic about the future as your run-of-the-mill Reason libertarian?

    One need not be a pessimist to think that a balanced diet and ample exercise are the best advice, no matter how many hearts they eventually grow in Petri dishes.

  • ||

    The belief in "wonder drugs" is greatly surpassed by the belief in "wonder government".

  • ||

    The prominence of young persons among the big consumers of trans fats, cholesterol, and calories in foods like French fries and big Macs may not be due to ignorance.

    It's more likely to be apathy. Even though you're aware that too much McDonald's will chunk you up, unless you actually do chunk up, you don't care about any long-term health risks.

  • :-||

    Diet and exercise are not very important to young people, especially those who can eat anything they want and never gain an ounce. With age comes wisdom and fat and only then will most of them resort to the tedium and self-denial of the middle-age diet-and-exercise regimen.

  • Sam Franklin||

    A strict Chicago School economic analysis of the ban would deem it inefficient. The restaurant industry in New York is highly competitive, and so if consumers are willing to pay a higher price for meals that do not contain trans fats, the industry will oblige them; to force them to shell out more money, rather than leaving it to their decision, is thus paternalistic, indeed gratuitous.

    This assumes more information in the market than exists. If NYC pursued labelling requirements for a time, instead of years, Posner's world may have come to pass. However, the (pretty cool) world of trans fat competition in restaurants that Posner posits would never realistically emerge absent some labelling requirements.

    Maybe Philadelphia will take that approach instead. They should.

  • ||

    It always amazes me how I can make exactly the same point as several other posters, and be accused of being a terribe person for it, while no one else's comments generate a response.

    Except that, instead of "always," substitute "never."

    andy, I don't give a fig about your feelings. You should make more of an effort to consider points on their merits. Had that comment been posted anonymously, you wouldn't have batted an eye.

    And people accuse ME of partisanship.

  • ||

    i'm a bad libertarian and a bad new yorker because i don't really care about transfat bans.

    If I were a better federalist, I wouldn't care at all about what places like New York or California did. Or rather, if people in various layers of government were better federalists...

  • alkali||

    If you agree that the government should regulate what ingredients and food additives restaurants may use -- and I know that's a big "if" -- then the case for banning trans fats is pretty compelling.

    Becker's back of the envelope cost-benefit analysis suggesting otherwise is not very sound, for two reasons:

    First, Becker uses a way-low-ball estimate of the benefits of banning trans-fats in NYC restaurants (Posner's guess is $3.5b/year, compared to the $100m Becker uses in his calculation).

    Second, the 35c figure Becker suggests as a potential marginal "taste value" of trans-fats is almost certainly too high. The vast majority of "restauarant" meals in NYC that involve trans-fats are fast food meals involving a couple bucks worth of food products. 35c is a big chunk of that, very probably too big since there is a dispute over whether people can even taste the difference between products prepared with trans-fats versus those prepared with substitutes. (My understanding is that the reason restaurants use trans-fats is that they are more shelf-stable and have other convenience benefits, not that they make the finished food product taste better.)

  • Barbar||

    Adding $70 Million in costs actually makes Becker's point

    I actually meant costs for consumers who "rationally" steer clear of restaurants that use transfats.

  • ||

    Why the hate for joe? Others of us said basically the same thing in this thread.

  • ||

    Why the hate for joe?

    Because joe has the bureaucrat's gift for getting people's backs up with his smug assumption of superiority.

  • ||

    Why the hate for joe? Others of us said basically the same thing in this thread.

    Some people just aren't as calm about disliking the guy as I am.

    The real question is what kind of idiot gets worked up about anyone's objection to this incredibly vapid, stupid claim. This goes beyond Mangu-Ward being conservative or even a shill - this is just mind-achingly idiotic.

  • ||

    This goes beyond Mangu-Ward being conservative or even a shill - this is just mind-achingly idiotic.

    Yep. I mean, I know Becker and Posner were just musing, and it's inevitable that a bad argument will get tossed out in a long debate of mostly idle musings. But to pick up on the worst argument in the entire exchange and cite it as the best? Beyond belief.

    I will agree with one thing Katherine Mangu-Ward wrote:

    They are both smarter than I am...



    No arguments here.

  • ||

    why all the hate for teenagers mental capabilities. they've lost far fewer neurons than you guys.

    the net present value of a tasty cheeseburger or w/e is far higher than the discounted value of possibly having clogged arteries or heart disease in the future, and they know we'll probably have socialized health care by then so how is that not rational?

  • Jennifer||

    So I guess teens still go to tanning booths due to an unarticulated awareness that by the time the UV rays start catching up to them, scientists will have discovered a cure for wrinkles?

  • ||

    I would gladly pay for artery clearing drugs next Tuesday for a trans-fat laden burger meal today!

  • ||

    File this one with the "Hummers actually use less energy than hybrids!" article. Was that KMW as well?

  • ||

    File this one with the "Hummers actually use less energy than hybrids!" article. Was that KMW as well?

    Yes, but this one out-dumbs that one.

    Maybe she's a deep-cover Democratic plant designed to make any opposition to bad Team Blue ideas look moronic.

  • ||

    I thought Shikha Dalmia was the one who did the "Hummers actually use less energy than hybrids!" article.

    Maybe KMW blogged it?

  • ||

    Maybe KMW blogged it?

    I thought so. Could be wrong.

  • Jennifer||

    The reason teens listen to such loud, loud music is because they have an unarticulated awareness that by the time they get older, scientists will know how to offset the negative consequences of hearing loss.

  • ||

    Teens drive poorly because they have an unarticulated awareness that bioengineers are making rapid progress with prosthetics and repair of damaged nerves.

    I just hope I managed to impress Katherine Mangu-Ward with that. Maybe she'll quote me or something.

  • Jennifer||

    No dice, Thoreau. My comments about loud music and skin damage were far more quoteworthy than yours.

  • ||

    But my comment touched on things that transhumanists are enthused about. That makes it far more impressive.

    Anyway, can we at least agree that Starbucks and WalMart are just super?

    (Quote me, Katherine. Please!)

    Gotta go. I'm going to drive home in a Humvee. It's better for the environment. Or at least that's what Shikha Dalmia said.

  • Jennifer||

    But my comment touched on things that transhumanists are enthused about. That makes it far more impressive.

    Yes, Thoreau, but thinking that teenagers actually consider future prosthetic advancements to make unconscious yet rational decisions about the cost-benefit ratio of irresponsible driving is simply asinine.

    However, thinking that teens do the exact same thing regarding loud music, premature aging or transfat's artery-clogging qualities is pure brilliance. Really it is.

  • ||

    I'm posting from my coal-powered humvee. (Don't worry, it's far more eco-friendly than a hybrid. Just ask Shikha Dalmia.) Jennifer, you're wrong. Prosthetics are cool, because you gain the freedom to take on any form that you like and transcend human limitations. Cardiovascular medicine just doesn't have the same coolness factor. It's, like, for old folks and stuff.

    Anyway, gotta go. I have to buy some stuff from WalMart. (They rock!)

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