Friday 17 July 2015

Sweet Truth

It's been a week of sugar, starting with the deeply misleading article on the front of the Sunday Times and culminating in the SACN report today. I'll say more about the latter next week, suffice it to say that its conclusions do not follow from the evidence.

It was a good (or possible bad) week for the Institute of Economic Affairs to release a new report on sugar which Rob Lyons and myself have been working on since the start of the year. It asks a question that is shamefully not being asked in all the hullabaloo about what the ideal amount of sugar to eat might be, ie. whether the government should be getting involved at all.

Specifically we find that:

  • Consumers are reasonably well informed about the hazards of eating too much sugar in terms of obesity, diabetes and tooth decay. The vast majority of food is adequately labelled.
  • Consumers have an enormous amount of choice, 'food deserts' don't exist in the UK, and low-sugar options are readily available to those who want them
  • There are no significant negative externalities associated with obesity, but even if external costs existed they would be the result of caloric food and drinks in general, plus physical inactivity. There is no reason to single sugar out.

In short, there is no market failure for the government to (attempt to) correct. Moreover, the solutions proposed by Action on Sugar are seriously flawed. For example...

  • A ban on television advertising for foods that are high in fat, salt or sugar (HFSS) before 9pm would effectively confine the promotion of a huge number of products, including cheese, bacon, cakes and biscuits, to a few hours late at night. Such a ban would have a detrimental effect on programming and would restrict useful commercial information.
  • Limiting the availability of fast food outlets stifles competition, favours incumbents, and distorts the market by preventing supply meeting demand. It is therefore likely to result in higher prices and poorer quality.
  • Taxes on food and soft drinks have been shown to be ineffective in reducing obesity due to inelastic demand and substitution effects. The cost to the taxpayer far exceeds any savings that might be made and the highest burden would fall on low income consumers. 

If you're at all interested in the current sugar debate, I recommend you download Sweet Truth for free here and read it.

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