Healthy living vouchers: will they work?

by on April 3, 2011 at 6:27 am in Economics, Food and Drink | Permalink

Matt Ridley writes:

Drawing a direct analogy with the effect of vouchers in the education system, Messrs. Seeman and Luciani suggest “healthy-living vouchers” [TC: book is here] that could be redeemed from different (certified) places—gyms, diet classes, vegetable sellers and more. Education vouchers, they point out, are generally disliked by rich whites as being bad for poor blacks—and generally liked by poor blacks. A bottom-up solution empowers people better than top-down government fiat.

So instead of spending large sums on ads to shame us into better eating habits, spend the money on vouchers handed out to the overweight and let them find whatever provider of goods or services best meets their particular dieting needs. After all, the root causes of obesity are multifarious and new ones are being added all the time—such as diet sodas, gut bacteria, genes, sleep apnea, leptin levels, medication, depression, poverty and peer pressure. So the solutions need to be multipronged, too. What works for you may not work for me.

A few points:

1. How exactly does one identify who deserves the voucher?  Or does everyone get them?  (Do we at this point need another middleclass entitlement?)  How much does the price of the good stuff go up?

2. The vouchers can be resold on secondary markets, as food stamps often are.

3. Portfolio effects: the unhealthy person might go to the gym with a voucher and then “make it up” by performing more of the unhealthy behaviors as recompense.

4. Income effects: if the voucher boosts the real income of the unhealthy person, they may well end up buying more stuff which is bad for them.  I don’t see that the proposal calls for a simultaneous, income-neutral scheme of taxation.  Buying more bad stuff and also more good stuff is not a wash, which brings us to:

5. It is easier to destroy than to preserve health, which suggests limiting the bad, or persuading individuals to limit the bad, will create more health benefits than encouraging the good.

I’m all for creative thinking here, but it’s hard to see this proposal working.  If nothing else, though, it shows why this problem is so hard to solve.

Andrew April 3, 2011 at 6:47 am

Two things: First, come out with products that are healthy, fun and don’t take a lot of time. Two, leave everyone alone so they have time to do healthy things that take a lot of time. I bet people pushing vouchers don’t believe there could be a connection between things like inflation and fast food.

Rebecca April 3, 2011 at 7:08 am

Open up the health insurance market to proper competition, make health insurance contributions have a direct impact on the purchaser, and only the purchaser, and then allow people to eat, smoke, drink whatever they want.

Millian April 3, 2011 at 7:15 am

3 is definitely true, in my experience of Lent this year.

The “problem” is that some people recognise that they can enjoy the benefits of unhealthy living today while “society” pays for many of the costs in the future. Given a certain set of preferences that differ across individuals for the benefits of unhealthy living, we’d expect a group of people to consume too little “health” at the prevailing price, and then change their consumption bundle in a manner that accounts for those preferences when they enjoy higher real income. I think the most basic economic points here (3/4) are the most important ones to make.

albatross April 4, 2011 at 10:43 am

I see your point, but honestly, nobody suffers more from your own bad health than you do, personally. This isn’t like me burning dirty fuel in my furnace, getting a warm house a the cost of adding to air pollution. It’s more like me burning my own house down by poor maintenance of my furnace, and thus adding to air pollution along with losing everything I own and risking being burned to death.

Johan April 3, 2011 at 7:28 am

The problem here, it seems to me, that we first have to determine what is healthy for us. Looking into the science it seems many of the common sense health recommendations don’t hold up very well. It seems fructose makes you fat, running for an hour gives you repetitive stress injuries, and nobody can decide what is ergonomically optimal: standing in front of a desk to spare your back or sitting in front of the desk to spare your knees.

E. Barandiaran April 3, 2011 at 7:31 am

Tyler, the only relevant point is your # 5. Since destruction has always been easier than conservation and much easier than construction, society has struggled to limit destruction by prohibiting some behaviors (for example, even a NFL player cannot use a gun to stop a Joe Montana), by letting people to discriminate against others inclined to destructive behavior (for example, to excessive drinking or risk taking), or by encouraging the internalization of the all costs of their destructive behavior (for example, as suggested by Rebecca in her comment). Regarding obesity, among other things, the increasing number of obese people is the pervasive rejection of most forms of discrimination, including discrimination against people inclined to destructive behavior, and the pervasive acceptance of victimization that limits the internalization of all costs of destructive behavior.

Jack April 3, 2011 at 7:32 am

I second Millian. Also, if we’re going to consider vouchers, I would prefer to simply make those ”certified” healthy expenditures tax-deductible.

dearieme April 3, 2011 at 8:17 am

“I’m all for creative thinking here…”: vouchers creative? About as creative as those adverts that just rip off scenes from the cinema.

Floccina April 3, 2011 at 8:42 am

April fool?

Floccina April 4, 2011 at 9:40 am

I should have written:

“April fools?”

Noah Yetter April 3, 2011 at 9:18 am

It seems for this to be even worth considering, we ought to have in front of us some evidence showing that what’s holding people back from doing healthy things is PRICE. I know for my part, the reason I don’t go to the gym has nothing at all to do with the cost of a membership, so a free one from the government isn’t going to make a lick of difference. Same for eating more vegetables.

People eat unhealthy food because SUGAR and FAT are DELICIOUS. People don’t exercise because EXERCISING IS BORING. These facts are very powerful at the margin, and it would take more than a small subsidy to overcome them.

Bernard Yomtov April 3, 2011 at 11:28 am

This sounds exactly right to me.

I belong to a gym. It doesn’t cost much to begin with, and my health insurance reimburses me for about half. I have to make myself go, because I don’t enjoy it. It’s boring, and so I’m prone to skip days. Making it free isn’t going to change that.

Another way of expressing Noah’s idea is that the biggest part of the price of doing “healthy things” is not monetary, so that monetary solutions don’t solve the problem. Certainly the kind Ridley proposes don’t.

Rahul April 3, 2011 at 2:24 pm

What if your health insurance started adding a penalty clause hiking your insurance by 10% if you didn’t exercise, say, at least 100 times a year? Would that be better motivation?

doctorpat April 3, 2011 at 10:35 pm

It would be a better motivation, but I can see issues with the “yearly part”. How many people will find themselves with 2 weeks left to fit in 97 exercise sessions? A weekly system would be far more likely to be followed.

But I am struck by the inherent unfairness where someone how likes going to a fancy gym gets all their exercise quota, but someone who prefers jogging (for example) or even prefers a local, cheap, uncertified gym, is left paying the extra fee.

Mel April 5, 2011 at 5:51 pm

But how would they know if you were even doing the required excersises? Would anybody want some insurance company monitoring them that closely?

albert magnus April 3, 2011 at 9:34 am

How about massive investment in pharmaceutical solutions? Priority funding for human trials with appettite suppression drugs.

John April 3, 2011 at 9:37 am

If the answer to item 1 is everyone then it’s not clear 2 will be an issue. I suppose that will depend on what we define as “the good stuff”. In addition, the voucher could be a biometric smart card only the designated recipient can activate — so much for internet purchases on that one I guess.

I’m not sure the income effect would work as suggested, I think it will a asymmetric and only serve to increase consumption of “the good stuff” rather than working as a general relaxation of the budget constraint.

At the end of the day, I don’t see how the vouchers will change behavior or have a beneficial marginal effect greater than the marginal costs of the program. I suspect gyms and businesses like GNC would be the biggest beneficiaries.

Even if it’s for “good reasons”, I don’t think formal government programs are appropriate for promoting or discouraging what are private life style choices. Not only does this show the problems in solving such problems, it shows how such attempts invariable create such problems. Would this even be an issue we’re discussing if we didn’t have the type of socialized health system and health insurance system we have? If , as suggested above, people were shopping for their health insurance and services then we’d have a better observational set of who chose longevity over it’s alternatives.

JonF April 3, 2011 at 6:46 pm

Re: Would this even be an issue we’re discussing if we didn’t have the type of socialized health system and health insurance system we have?

Yes, because no matter how we pay for healthcare, unhealthy people will drive up the costs thereof. That’s the law of supply and demand, and there’s nothing socialistic about it, except to the extent that all economies are in some sense socialized since they involve, public, social behaviors.

Daniel Klein April 3, 2011 at 9:37 am

For both schooling and healthy living, the order of alternatives is:

1. laissez faire
2. vouchers
3. socialism

In schooling, vouchers would be a step up because we are at 3. In healthy living, a step down because, loosely speaking, we are at 1.

US April 3, 2011 at 10:45 am

“In healthy living, a step down because, loosely speaking, we are at 1.”

So when people live unhealthy lifestyles today and get sick tomorrow, they actually end up bearing the full costs of their lifestyle choices?

Slocum April 3, 2011 at 11:25 am

Its entirely possible that people with unhealthy lifestyles more than bear the costs of their choices. All bodies break down eventually, and the diseases that afflict and eventually kill health-conscious people are not necessarily cheaper to treat. And people who die young before they collect much (or any) social-security may help keep the system solvent.

But even if that’s not the case, the government has no damn business trying to nudge, coerce, or ‘incentivise’ treadmill running and fresh vegetable eating.

US April 3, 2011 at 11:35 am

Yes, I was thinking along similar lines myself later. I was probably wrong about my views on cost sharing under the current system, but the main point should also have been that ‘healthy living’ today is not a laissez faire policy-area.

US April 3, 2011 at 11:30 am

Ok, that was an imprecise statement as it implied that laissez faire necessarily means that people ‘end up bearing the full costs of their lifestyle choices’, which is not in any way a given. I guess I had an implicit prior hidden somewhere that unhealthy people benefit disproportionally from government programs – and this is actually not clear at all.

However it doesn’t subtract from what should have been the main point, that you can not simply disregard the effects on ‘healthy living’ that the massive amount of government involvement in the health care sector has. The level of government involvement in related areas makes it quite problematic for me to think of the area of ‘healthy living’ as anything remotely similar to ‘laissez faire’.

Millian April 3, 2011 at 9:52 am

That is a predictable assertion, but I don’t think it is trivial to assert that socialism in healthy living would be worse than the current “laissez-faire” outcomes, for the United States at least.

Aaron April 3, 2011 at 10:27 am

The “real” solution is dirt simple. Just remove health insurance and allow employers to summarily fire any employee who becomes unfit for work. THAT would put an end to all sorts of unhealthy behaviors, from obesity to extreme ironing (no, I’m not making that up).

Of course, it also penalizes people for simply having bad things happen to them through no fault of their own, which violates our current implicit (and in some cases, explicit) social contract. Which is really what’s at the heart of the issue. I think it was Tom Socca on Slate who penned a long essay pointing out that our current social contract expects us to do our best to not leave people in the lurch. Yet, we also realize that the contract, as written, has the side effect of shifting costs from some people and onto others. (If you’re feeling really uncharitable, you might make the point that this is the very reason for the social contact in the first place – those people who fear they’ll be on loosing end seek to sucker the more successful into agreeing to care for them, and passing that obligation on to future generations.) Schemes to limit those costs are always going to be tricky to implement because the beneficiaries of the contract, having developed a sense of entitlement and the opinion that resources are free, will tend to push back, having every incentive to see changes to the contract as veiled attempts to abrogate the contract. This is a side effect of “Nothing is impossible to the man who doesn’t have to do it himself.” Once you allow yourself to understand that other people’s money is unlimited resource, it’s easy to understand attempts at thrift as being motivated by greed and selfishness.

Which, in the end, becomes the problem with #5, which, if you accept the other four as more or less correct (although I would re-word #3) does present itself as the best option. It also presents itself as an abrogation of the social contract, especially because the first things that people move to limit are usually based more on their likes and dislikes and subjective understandings than the actual risk. As an example, which is the “greater risk” to one’s “health”: riding your bicycle to work five days a week alongside a busy thoroughfare, or being 50 pounds overweight? I have no idea. But I DO know which one is less socially acceptable. And people tend to have difficulty distinguishing between criticizing a behavior, and criticizing the people who engage in that behavior. (In this regard, the fluidity of English isn’t helpful.)

joan April 3, 2011 at 10:48 am

The effect of vouchers in the education system is mixed at best, and not a good reason to start another program to make poor people more like the rest of us. Someone said long ago, I forgot who, in the debate about negative income tax that the biggest difference between the poor and the middle class is that they do not have as much money.

SteveX (formerly Steve) April 3, 2011 at 11:15 am

Why would we need vouchers to solve something that natural selection is going to take care of ultimately anyway? As they say, all smokers quit eventually.

JonF April 3, 2011 at 6:47 pm

Natural selection only works when people die before reproducing. Neither smoking nor bad eating habits kill people in their youth.

SteveX (formerly Steve) April 3, 2011 at 8:35 pm

True, but stupidity might. Is there a correlation?

doctorpat April 3, 2011 at 10:40 pm

Neither smoking nor bad eating habits kill people in their youth.
So we have to get people to start smoking earlier?

Floccina April 4, 2011 at 9:50 am

Cigarette smoking does kill some people by increasing the number of fires.

Marian Kechlibar April 5, 2011 at 4:38 am

There is also sexual selection. If females prefer males who smoke and have bad habits, those may actually get more widespread in the population.

Toni H April 3, 2011 at 11:16 am

We actually have these vouches in Finland (“excercise vouchers”). At least some public sector employees get them for free but for myself they’re not free, just tax-deductible. They are accepted in most gyms, swimming halls, yoga classes, etc. I can get them for a couple hundred euros per year.

We also have “culture vouchers” for museums etc.

SteveX (formerly Steve) April 3, 2011 at 11:30 am

ToniH:

How long have these programs been running in Finland?

Have there been any documentable results from them (political or otherwise)?

Would you, as someone who has had personal experience, want these programs to continue based upon their success, or terminated based upon their inability to achieve the desired results?

Toni H April 3, 2011 at 11:20 am

PS. one bowling alley that accepted these excercise vouchers actually gave you the option of buying a beer with them. It only lasted for approximately 6 months before the authorities noticed it.

dave April 3, 2011 at 12:19 pm

I suppose since I’m already thin I won’t receive a voucher, even if I already lay out my own money for quality food and gym membership. Kinduv like how if I save for retirement I’ll probably get means tested out of SS when the time comes.

Honestly, are you all intent on eliminating any reason for the middle class to better themselves and act responsibly.

doctorpat April 3, 2011 at 10:42 pm

No. Merely to eliminate any reason to better themselves in a way that the government can keep track of.

Benny Lava April 3, 2011 at 12:57 pm

There is evidence that people who drive for all their commuting and travel needs are more obese than people who walk and take rapid transit. So may e the solution is simple: increase the gas tax.

Yancey Ward April 3, 2011 at 3:46 pm

Or, even better, just eliminate cars and public transport. Walking is good for you.

doctorpat April 3, 2011 at 10:42 pm

Or even better, eliminate starter motors so all cars have to be push started.

Stuart Buck April 3, 2011 at 1:01 pm

Odd. 1) Rich whites dislike school vouchers not because of patronizing concern for poor blacks, but because they don’t want a school finance system that might disrupt the premium that rich whites pay for their housing. 2) Getting in better health doesn’t require extra money — eating less food costs less money, and it isn’t expensive to go for a walk or run.

JonF April 3, 2011 at 6:50 pm

Eating better food may not cost money, but getting plenty of exercize can, if you’d have to cut back on working hours to achieve the goal. That is one of the main villains (at least in my life): I am just too busy to exercize most days, beyond the 30 or 40 minutes I spend biking to work and back daily.

Tom April 4, 2011 at 9:42 am

Eating better food usually does cost more. In money and time preparing it. Given that the poor are usually the most obese, I would say they have plenty of time on their hands to exercise.

Sam April 3, 2011 at 2:08 pm

In fact, I wonder if vouchers might actually make some people go to the gym less because of the sunk cost fallacy. If I pay for gym membership, I feel bad skipping because I’ve already paid for it and I’m wasting my money (I know that’s irrational, shut up!) If I were to get a voucher for the gym, that feeling of guilt would go away.

Six Ounces April 3, 2011 at 2:39 pm

Subsidies do not work. My company gives out an annual benefit for health club memberships, and it hasn’t affected median obesity (at casual observation).

So if subsidies don’t work, try a tax – a fat tax.

I haven’t been out to a night club in at least five years, but I went to a salsa club last weekend. The number of obese women (mostly Hispanic) in their big black dresses was….shocking. I remember them, not too long ago, being extremely slim and attractive.

I’m sure the men were just as bad, but I wasn’t paying close attention.

I’m sure my observation violates ceteris paribus. Perhaps the composition of patrons at this particular club has changed. Perhaps the demographics of the neighborhood have changed. But, my God, it was bad. The next morning I woke up and went straight to the gym.

jfxgillis April 3, 2011 at 3:03 pm

Tyler:

Basically, this is the Right devolving into self-parody. If it were datelined two days ago I’d say it was parody.

Bill April 3, 2011 at 7:40 pm

1. This is a subsidy for gyms and healthclubs.

2. Initial conditions matter: if the program starts when you are already overweight, studies show you will not lose much weight regardless of the incentives.

So, it is kind of a carbon tax–a fat tax.

3. You can see whether this works or not by looking at some of the healthplans that require you lose a certain amount of weight, or maintain your weight, or participate in a program, and if you do not, your co=pays increase. I haven’t seen the research on this, but I have seen plans like this. In fact, my wife has the insurance under a family plan, and she had to participate in a survey and plan to avoid increased copays. I, as her “medical dependent” escaped scrutiny and control.

Sweet.

Matthew April 3, 2011 at 9:39 pm

Obesity is caused by excessive sugar and other carbohydrate consumption. All the noise about dietary fat is a complete and utter red herring (as long as carb consumption is strictly limited).

Anotherphil April 4, 2011 at 12:50 am

Ahh, nothing quite like the intoxicating feeling of exercising power in the form of a little social engineering-and when you can wrap it in the noble cause of improving the lot of the great unwashed, well bully!

Anotherphil April 4, 2011 at 12:59 am

I haven’t been out to a night club in at least five years, but I went to a salsa club last weekend. The number of obese women (mostly Hispanic) in their big black dresses was….shocking. I remember them, not too long ago, being extremely slim and attractive.

Wait till you see the present day grade schoolers when its their time to go ‘clubbing-who can’t go outside and play because of the fear of predators and in a few years will show no physical development other than prodigiously large first metacarpals.

Floccina April 4, 2011 at 9:52 am

I still think this an April fools post but I am not sure that we really know what behaviors are more healthy.

Now you could ban the motorcycle but that is no fun!

SteveX (formerly Steve) April 4, 2011 at 10:56 am

But if you ban motorcycles, you eliminate a prolific source of organs for transplants. Will that drive up Medicare costs? Ahh problems, problems, problems. Is there no easy answer?

jvon April 4, 2011 at 10:29 pm

I’ve eaten more junk food in the past two years than in the preceding ten. The reason is: the economy sucks, and it’s the only restaurant food I can afford.

Maybe Democrats could stop finding things to shovel money at so the economy can come back? How’s that for a radical idea?

David H Dennis April 4, 2011 at 10:52 pm

What I suspect would help fight obesity the best is the existance of better prepared or frozen foods that were not high in sugar and carbs. If such things were available and tasted good, I would eat them. I try to prepare healthy meals myself, but in our busy and complex society, it’s much easier to outsource cooking to people who really know how to do it – restaurant and food service types.

Unfortunately, the only frozen foods I know of that are lacking in bad ingredients taste terrible. Virtually all prepared foods of any kind are high in sugar and carbs, because as someone else pointed out, they are an easy and cheap way to make food taste good.

The best solution, in my opinion, is to figure out a way to change the body’s programming so it takes most of the bad ingredients and simply excretes them without processing them. The body’s internal functions are like a computer; why not just change the way it processes food and therefore allow us to eat whatever we want?

The person who invents such a drug/operation/gadget will make a fortune.

D

The Quietist April 4, 2011 at 11:41 pm

The answer is socialism. The Ukrainians in the 1930s, the Chinese in the 1950s, and the Cubans in the 1990s were all remarkably thin.

Me April 5, 2011 at 3:18 am

How about this solution: Everyone is responsible for their own health care / medical insurance.
Then no one has to get into anyone else’s business about it!

Christopher_T. April 5, 2011 at 3:58 pm

Ending sugar subsidies and corn (high-fructose corn syrup) subsidies would raise the prices to market levels and make them more expensive. As a diabetic, it would be nice to have less sugar in stuff. Just as an exercise, look at the labels on food-it’s remarkable how many products uses either sugar or HFCS.

It would be best to get out in front of this now with a free-market solution. The diabetes rate is soaring, and going to get worse. Mine, by the way, was caused by anti-depressants.

Jane April 24, 2011 at 12:29 pm

I don’t see it working either and when it comes down to it people are responsible for their own health. Educating them into better eating habits is the key here. silkbodylotion.com

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