In 2011, New York City mayor Michael R. Bloomberg proposed a ban on using Supplemental Nutrition Assistance Program benefits (commonly known as food stamps) for the purchase of sugar-sweetened beverages. While the plan has been criticized by food and beverage lobbyists – such as the American Beverage Association, which has amongst its members Coca-Cola and Pepsi – as well as anti-hunger groups, it does have the potential to decrease sugar-sweetened beverage consumption.
Opponents associate the mayor’s proposed ban with a “nanny state,” ignoring, however, the fact that food stamps recipients already face restrictions: alcohol, cigarettes, non-food items and vitamins, among others, are not purchasable with SNAP benefits (United States Department of Agriculture, 2013). As such, it has already been agreed that those receiving government assistance should not have their consumption of certain items subsidized by the state. Why should it be any different with sugar-sweetened beverages, which offer little to no nutritional value?
Arguments have been made that such a measure would stigmatize low-income individuals, increase program complexity and put an undue burden on stores and supermarkets, which would be responsible for enforcing compliance. These arguments seem foul, as restrictions already exist; banning soda would not introduce a new set of requirements. Stores already have to enforce compliance when it comes to the purchasing of restricted items, the government already has more complex lists of banned items – the Women, Children and Infants (WIC) program has much more extensive restrictions on subsidized items – and, it can be argued, low-income Americans are already stigmatized when they attempt to purchase alcohol and tobacco using food stamps and are not allowed to do so. It is also worth noting that Americans already believe those dependent on government assistance should not receive subsidies for just any item – thus the reason food stamps are more politically popular than in-cash transfers, in spite of the fact that the latter are generally more efficient. Furthermore, as a high proportion of individuals on SNAP also qualify for Medicaid, the government has an interest in incentivizing healthier eating habits as a means to reduce publicly funded health-related expenses.
Banning the use of food stamps to purchase sugar-sweetened beverages and banning sugar-sweetened beverages themselves is substantially different. While the latter infringes on an individual’s right to consume what he sees fit – although that right is already restricted for certain items, such as recreational drugs – the first simply places restrictions on the goods for which low-income Americans can get federal subsidies. Contrary to what opponents of the ban suggest, simple logic would imply that reducing federal subsidies decreases the role of the so-called “nanny state,” not increase it.
Political arguments aside, would such a ban be effective in reducing sugar-sweetened beverage consumption among SNAP recipients? Economic theory suggests it would. Although SNAP recipients would still be free to purchase sugar-sweetened beverages with their non-SNAP dollars, the relative cost of such beverages would go up in comparison to food, as they would no longer be subsidized.
According to the Yale Rudd Center for Food Policy and Obesity, SNAP receiving households consume an average of 399oz of sugar-sweetened beverages, equivalent 58% of all beverages purchased, in comparison to 169oz in WIC receiving households, which is equivalent to 48% of the beverage consumption of the latter (Andreyeva et al, 2012). As mentioned before, WIC has much more stringent restrictions on which food items are subsidized.
Although the magnitude of the consumption changes would be better estimated if a ban on the use of SNAP for purchasing sugar-sweetened beverages were actually implemented, economic theory and real life comparisons between SNAP and WIC recipient consumption patterns show that NYC’s proposed ban would indeed be effective in reducing sugar-sweetened beverage consumption.
Given NYC’s goals of reducing obesity among its citizens, the effectiveness of the proposed sugar-sweetened beverage ban can be increased if coupled with other measures to increase healthy eating among low-income families. At the federal level, one such policy would be to end farm subsidies for corn and soy, which currently make ultra processed foods cheaper than they otherwise would be, thus distorting behavior. Although the actions enacted at the federal level have the power to impact the entire food system, there are actions that can be taken at the state and city levels, ranging from nudges, such as mandatory calorific labeling at restaurants, educational campaigns and healthier lunch choices at public schools, to interventionist policies, such as increased taxation of unhealthy foods.
Policies to nudge the individual towards healthier choices, such as those described above, would keep the individual at the same level of utility level but at a new optimum choice, where changed preferences (as a result of expanded health related knowledge, for example) would lead him to consume less soda. Thus, the individual remains on the same utility level. This rests on the assumption that the loss of utility from reduced sugar-sweetened beverage consumption is made up by the expected increases in health and longevity resultant from a healthier diet – if this were not true, i.e. if these gains did not make up for the loss of “satisfaction” that the individual gets from consuming such drinks, the nudges would be inefficient.
A tax on sugar-sweetened beverages would influence behaviour by increasing the final price of such beverages. Both substitution and income effects would lead the consumer to decrease his consumption of such beverages. Under this policy, consumer utility is reduced.
In summary, nudges would keep utility constant whilst leading individuals to lead healthier lives, whereas an interventionist policy (taxation) would put individuals at a lower indifference curve. Given the options mentioned above, optimal efficiency would be achieved by mixing both policies, as individuals would voluntarily reduce part of their consumption of sugar-sweetened beverages and the income and substitution effects resultant from higher taxation would reinforce such reduction.
Works Cited
Andreyeva, T., Luedicke, J., Henderson, K., & Tripp, A. (2012). Grocery Store Beverage Choices by Participants in Federal Food Assistance and Nutrition Programs. American Journal of Preventive Medicine , 43 (4), 411-418.
United States Department of Agriculture. (2013, 07 25). Supplemental Nutrition Assistance Program. Retrieved 09 27, 2013, from Food and Nutrition Service: http://www.fns.usda.gov/snap/retailers/eligible.htm