Should we ban trans-fats?

by on December 29, 2006 at 7:24 am in Food and Drink | Permalink

Gary Becker does a quick cost-benefit analysis in his head:

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.

If you click on the link, you’ll see some good arguments against paternalism as well.

1 tom s. December 29, 2006 at 8:54 am

I don’t often agree with GB, but I do on this one. Paternalism at its worst. As an aside, however, don’t the arguments here – Becker’s, and those he opposes – rely on interpersonal utility comparisons? They seem difficult to avoid once you hit the real world.

2 KipEsquire December 29, 2006 at 9:55 am

The cost, in terms of lost freedom and autonomy, of blocking competent consenting adults from engaging in a 35-cent transaction is far far greater than 35 cents.

3 alkali December 29, 2006 at 10:18 am

Becker is using a $100mm benefit estimate and a $30mm estimate of direct costs to restaurants, and arguing that if the marginal “taste value” of trans-fats is more than $70mm (200mm meals x 35c/meal) the ban cannot be justified on a cost-benefit analysis. But it’s virtually unimaginable to me that the taste value of trans-fats in foods averages anything like 35c a meal.

The overwhelming number of those 200mm meals are fast-food-type meals costing a couple dollars, and the portion of the meal cost to the consumer that relates to products that could be prepared with trans-fats (that is, excluding sodas, ice cream, etc.) is even less. 35c would be an enormous chunk of that residual number, particularly given that it is generally agreed that the taste difference with trans-fats is very small if it is even detectable.

I would further note (as Becker admits) that the $100mm benefit estimate is very much a lower bound. Posner gives a $3.5bb benefit estimate, and if that number is right, then the lost “taste value” per meal that would be required to make costs exceed benefits would be something like $17.50.

I think the key point here is the point Posner makes in reply: “trans fats seem exceptionally dangerous–almost in the category of poisons.” As a general matter, I don’t want the government rifling my restaurateur’s cupboard either, but trans fats are so unusually bad as to be on a par with adding nicotine to your french fries.

4 Matt December 29, 2006 at 11:11 am

A quick cost-benefit analysis in his head that (surprise!) comes out supporting what ex anti that Becker would support beforhand- what a surprise! This is a pretty typical method for him, and one that gives economics a bad name as ideological and unemperical.

5 Tony December 29, 2006 at 11:25 am

I’m looking forward to the re-emergence of lard. That’s what trans-fats were originally meant to replace. And it tastes better.

6 tom s. December 29, 2006 at 3:47 pm

“I’m looking forward to the re-emergence of lard.” Bread and dripping as health food! How long before Woody Allen’s Sleeper comes to pass?

7 ptkelly December 29, 2006 at 6:28 pm

of course there is a search cost to finding foods without trans fats and if you value your health you willingly pay such search costs. if not…you eat at mcdonalds, you get fries with your steak instead of salad, etc.

the value of 35c does not have to be explicitly incorporated into the price but may reside in the consumer surplus. there are plenty of things that i “value” more than the cost of what i pay for and would willingly pay more.

consistency separated from taste? you’re telling me that soggy french fries “taste” the same as crisp french fries?

there is no tax on trans fat because it would be highly regressive. the horror – making people that incur the cost actually pay for it. that people know so little about it is a direct indication of the relative value to them.

fat, drunk, and stupid is a wonderful way to go thru life.

8 Ray G December 29, 2006 at 7:35 pm

The underlying argument to the ban, inasmuch as any of it can be reasonable, is of course that it is difficult for the consumer to learn about trans-fat, and then equally diffficult to detect when it is present in their restaurant purchased food.

Having said all of that, it is the height of arrogance to tell them what they can, and cannot eat. To think we have people fighting for the legalization of drugs, prostitution, euthanasia, all in the name of personal freedoms. But God help you if you use lard in my tortillas (and yes it makes a difference – you should taste the home made tortillas we buy).

Has anyone stopped to consider the black market forming for Crisco? Organized crime, street gangs, all engaging in rampant crime sprees in search of the inflated profits that illegal trans-fat will surely bring on the black market.

“Psst, buddy, got some Crisco in the trunk, uncut, best price. . . ”

9 silviu December 29, 2006 at 10:16 pm

There are surely some positive “knowledge† externalities for the rest of the country (world?) we should factor in. Local restaurants experiment a lot more than usual, and sooner rather than later, better tasting and healthier substitutes are bound to be discovered. In the concrete example of NY, a number of fast food chains have now been experimenting with soy-based oils for a year or so. Surely this will be good for consumers everywhere else: if you live in VA you will soon have more choice than ever, without being FORCED to part with trans-fats.

10 TW December 29, 2006 at 11:47 pm

Ptkelly, you get soggy fries without trans fats if you are being cheap and or incompetent about cooking them. Trans fats lowers the skill and resources needed to make good fries.

11 Ray G December 30, 2006 at 12:50 am

Posner: “They [the consumers] have, in short, no idea of the benefit of avoiding trans fats in restaurants.†

Therefore, the government is correct in banning a substance that is, and I quote “(very probably) harmful to health.†

This follows the very subjective reasoning that the average consumer is capable of understanding price differences in one commodity, but says Posner, they probably wouldn’t be able to understand the whole trans fat issue.

In a nutshell, we see the inherent problems in trying to plan a society, for whatever reasons. One man or group of people making broad and subjective assumptions about the rest of the population.

12 Ray G December 30, 2006 at 1:53 am

“Ah, OK Ray. But I have seen people seriously argue the equivalent of that.”

I thought the Crisco in the trunk line would have given it away. And I don’t think Crisco is even considered a transfat anyway, but I couldn’t think of an actual name brand source of trans fat.

The bottom line is still the govt making a decision for me (in principle since I don’t live in NY) that really isn’t theirs to make.

My main argument against most libertarian proposals is precisely the existing paternalism in our present soceity. We would essentially be setting the legalized thing, call it X, in a place of certain failure.

Once the externalities of others’ reckless behavior was realized, the “nannies” would have a great argument for saying why X was illegal all along. Whereas if we fix the system first, and then begin to loosen the govt controls on our individual liberty, we will be walking down the hill to get all of the cows, instead of running down to get just one (to cite the old joke about the young bull and the old bull).

Posner still claims he has a libertarian, Millsian position in this because of the externalities that trans fat related heart disease transfers to the taxpayer. But he is coming at it from the wrong direction.

Not legalizing X for the aforementioned reasons is simply being prudent, i.e. in the long run, X is still made legal. But Posner’s argument is to make illegal practices that are currently lawful, or were. This moves in the opposite direction of a freer, Millsian model, by basically giving in to the existing paternalism of our current system, and thus allowing that paternalism to shape future decisions about liberty.

13 kebMo December 30, 2006 at 1:40 pm

A few bones of contention:

I believe that most people are ignorant to the health hazards of trans-fats. Couple this with the fact that these cooking oils are more cost effective for the food producers and the likelihood of the market stepping in to fill the void for trans-fat free restaurant food is pretty much nil. Furthermore, even a trans-fat wary individual has a near impossible time steering clear of the substance in a restaurant setting as it’s not listed on menus or ingredient lists.

These health hazards effect a cumulative cost not only on each individual consumer, but eventually imparts an external cost on society as a whole (early mortality/morbidity, diminished productive capacity of the individual, increased health care costs).

Is it paternalism to discourage drunk driving? What’s the cost measure of pleasure that the would-be intoxicated drivers are missing out on? Does that constitute anti-libertarianism?

$0.35 of pleasure per serving? I find that difficult to believe. However, if the cumulative depravation cost is too great for society to bear, how about removing the trans-fats from the food as served and those that are willing to bear the cost trade-off can purchase spray-on packets of trans-fats to add to their fries etc, complete with a warning form the surgeon general?

14 Ronald Brak December 31, 2006 at 4:02 am

If I understand correctly the difference between a trans fat and an otherwise identical non trans fat is that trans fat molecule lacks a kink and is straigher. Is it even possible for a human to taste whether or not molecules have kinks in them or am I missing something here?

15 Battlepanda December 31, 2006 at 11:00 pm

Relax, Ray G. You can still get your Crisco. Here, stuff your face on this, zero grams of trans fat, baby. As for lard, that contains saturated fats, not trans fats. If you’re the proponent of people getting their own information and making their own decision, maybe you would make a more convincing case if you got your fats straight 🙂

Anyhow, agreed matt who calls bullshit on Becker’s “quick cost benefit analysis” in his head. If economists what economics to be taken seriously as a science, they should know that pulling numbers out of thin air is not a valid basis to begin your analysis.

16 Ronald Brak January 1, 2007 at 12:32 am

Thanks tom S. very interesting.

17 kcin January 2, 2007 at 5:10 am

Even if we got sick more often we wouldn’t be unhappier, after we had adjusted to the new higher expected level of sickness.

18 plavix June 2, 2007 at 1:01 pm
19 xenical June 3, 2007 at 6:07 pm
20 Anonymous October 14, 2008 at 4:12 am

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