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The NYC Soda Ban

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On September 13 the New York City Board of Health approved of Mayor Bloomberg's proposal to ban the sale of most beverages over 16 ounces that have more than 25 calories per 8 ounce serving. Last winter we talked briefly about the possible effects of a soda tax, but today we are taking the opportunity to discuss the possible effects of an outright ban on large sodas. Just as some economists believe that taxing soda will result in positive public health outcomes, and some believe they won't, economists differ in their opinions on what the public health outcomes of the NYC soda ban will really be and why.

Leaving aside the emotional and political appeals of the freedom to choose or the role of government in our lives, the goal of the soda ban is to make New Yorkers healthier and fight obesity. The foundation of the ban rests on idea that, on average, soda accounts for a large portion of the sugar and calories in an individuals diet. Bloomberg believes that portion sizes drive consumption, so cutting the size of a soda will decrease the amount of soda the average person drinks. He is not alone. Economics journalist James Surowiecki wrote recently in The New Yorker that while the soda ban is easy to get around (one can buy two 16 ounce sodas), the proposal makes use of the default bias or status quo bias. He states that as humans "we look to outside instruct us." A concept in behavioral economics is that we are not always the best advocates of ourselves, and at these times one can be 'nudged' to make a better decision, such as an automatic opt in on retirement savings. These types of measures, such as making the default option of soda smaller are sometimes referred to as soft paternalism and are designed to change our perception of what is the norm.

Other economists, such as Freakonomics Blog contributor Daniel Hamermesh, point out that a decrease in soda consumption may not be from changes in behavioral norms, but can be explained through the "standard neoclassical considerations of money and time costs in demand." Anyone who has purchased soda at the movies or convenience store can see that soda exhibits economies of scale - the bigger the soda, the less you pay per ounce. Not only will two 16 ounce sodas cost more than one 32 ounce soda, Hamermesh points out that there is also the time cost of getting up or making an additional stop to order the second soda.

However, not all economists believe the ban on large sugary drinks will work to fight obesity or decrease soda consumption. Prominent Cornell University researchers Brian Wansink and David Just write in US News and World Report that they fear that Bloomberg's plan could be "a huge setback for fighting obesity." Their argument is years of food economics research shows that people will buy what they want, regardless of the default choice. Additionally, it is New York's poor that purchase soft drinks, not the wealthy. They state that a family of 3 may share a large soda to save money, and thus making them buy multiple smaller sodas is a regressive policy. If it fails, which they believe it will, it will be a huge setback for new and better ideas on how to fight obesity as people will continually refer to 'what happened in NYC'. The two researchers close by saying there are better ways to lower consumption of calories from soda. Promotions of healthier alternatives, which consumers love, could benefit both the public health and business.

What do you think? Will a ban on large sodas fight obesity in New York City, and Why?

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This page contains a single entry by Sadie Dietrich published on October 10, 2012 8:58 AM.

Happy 100 Years Applied Economics! was the previous entry in this blog.

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