NCPA - National Center for Policy Analysis

An Alternative to the Fat Tax

August 2, 2011

Taxes dominate the debate on solving America's obesity epidemic.  There are big problems, though, with this idea, says David Gratzer, a senior fellow with the Manhattan Institute.

  • Even the most favorable studies argue that dietary taxes have to be very high -- in the 18 percent to 25 percent range -- before they will have any real impact on consumers.
  • Even then it's not clear that people will eat healthier; they may just shift their calories (from soda to chips, for instance).
  • Even if they didn't do that, taxing unhealthy foods is far more complicated than taxing paper sticks filled with tobacco.

Consider a positive alternative: Insurers -- public and private -- should offer rewards for measurable improvements in healthy behavior instead.  Two studies published this spring suggest there is significant evidence that incentive-based weight-loss programs can be successful.  The first study was British, appearing in the Journal of Public Health.  The second study was American, published in the Journal of General Internal Medicine.

  • In the British "pounds for pounds" experiment, about 400 people were paid to lose weight.
  • On average, the program cost about $300 per participant.
  • Forty-four percent of participants finished the year with "medically significant" weight loss, and nearly one-quarter of the group averaged 25 pounds lost.
  • The American study tested a variety of financial incentives on a group of veterans, finding that "incentives produced significant weight loss over an eight-month intervention."
  • The catch? Participants tended to regain the weight after the incentives had ended.
  • But that's no deal-breaker because it should be possible to design longer-term incentives. For example, Safeway's Health Measures program offers annual cash incentives for healthy behavior for its employees.

Source: David Gratzer, "Fat Taxes Go over Like a Lead Balloon," Washington Times, July 29, 2011.

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