Building H #83: Disease, Death, and Taxes
The American Beverage Association - a lobby group supported by soft-drink manufacturers including Coca-Cola, Pepsico, Monster, and most every other non-alcoholic beverage company you can think of - does not like soda taxes.
And if you happen to be googling to see if soda taxes work, they’re happy to suggest that they do not, with advertisements pushing links to stories that purport to prove that soda taxes don’t work. The stories, alas, are somewhat less persuasive than the ABA would like - but that doesn’t stop them from hyping the headlines. (screenshot above is from Google’s Ads Transparency Center that lets you see who’s buying what ads.)
It’s a clever and subtle campaign to counterprogram the growing wisdom among public health policy wonks that sugar and soda taxes do, in fact, work. The past decade has seen soda taxes adopted in cities and countries worldwide. A meta-analysis published in JAMA last year reviewed more than 60 studies of sugar-tax policies in more than 40 countries, finding that they did reduce consumption of sugary beverages by 15%. In the U.S., soda taxes have shown reduced consumption by as much as 22% in cities like Seattle - which explains the concern of the ABA to boost a dissenting opinion.
As policies go, soda taxes are a fairly blunt instrument, forcing consumers to pay more - sometimes imperceptibly - and often creating a regressive policy that affects poorer communities harder. But they do represent the most substantial effort to hold companies responsible for the health impact their products create - to, as we say, to own their outcome. And therefore it’s worth looking a bit at where they come from and what they may (or may not) lead to.
The soda taxes are one way to account for what economists call “externalities” - the consequences of products that are not captured by the costs of the product itself. A shout-out here to British economist Arthur Pigou who first proposed the idea in the 1920s, to respond to London’s notorious smog. The polluters, Pigou suggested, should pay a tax for the poisons they emit. It wasn’t until the 1960s, however, when pollution taxes started to be widely implemented as a matter of policy. These were followed by the expansion of so-called “sin taxes” (most commonly used on alcohol and tobacco since the 19th century) into steeper taxes intended to actually drive down consumption, most notably on tobacco in the 1960s and 1970s.
These tobacco taxes were largely successful, insofar as they were part of a broad based policy and social movement to reduce or eliminate smoking as a public health crisis. But how exactly the model could be applied to other, less immediately lethal, areas of health and consumption was less obvious. The externalities are often more diffuse when the consequences of unhealthy products are insidious and can take years to manifest. Can we really say that one more Snickers is responsible for a particular case of diabetes, 10 years hence? Or that one particular social-media app was the specific cause of somebody’s depression?
Well, maybe the answer is sometimes yes, we can. As the new advisory by US Surgeon General Vivek Murthy strenuously argues, “there are ample indicators that social media can also pose a risk of harm to the mental health and well-being of children and adolescents.” Importantly, the Advisory calls not just for policy solutions but that “technology companies can better and more transparently assess the impact of their products on children, share data with independent researchers to increase our collective understanding of the impacts, make design and development decisions that prioritize safety and health – including protecting children’s privacy and better adhering to age minimums – and improve systems to provide effective and timely responses to complaints.”
This is very much a call to Own the Outcome, and though it lacks specifics it is very much a new line in holding companies accountable for the health impacts of their products. But how, exactly, we might measure this accountability is ambiguous. Taxes on social media, for instance, seem unrealistic.
Another approach is to take a page from economist Ronald Coase, and look to a market-based solution. Again, pollution offers a precedent here. Environmental policy has for more than 30 years pursued cap-and-trade markets, where the polluters themselves - rather than the public - pay for credits to emit more than a certain measure of emissions. This has worked (somewhat) in the Paris Accords and in California.
Would a cap and trade approach work for health? Some big thinkers have tried to apply it to more obvious areas like food. Kristina Lewis and Sanjay Basu explored the idea in a 2014 paper in the American Journal of Public Health and a 2015 paper in Health Affairs, and found it credible. In their model a 1%-per-year cap on “sugar emissions” would reduce health expenditures (mostly on obesity and diabetes) by nearly $10 billion a year. Alas, the idea is a bit complicated to think through, and hasn’t seen any uptake beyond their work.
So the problem persists: it remains very, very hard to hold health “polluters” responsible for the negative externalities their products produce. Here at Building H, we’ll continue to look out for bright spots, and hope that some innovation is out there.
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