The Fat Fee

1 12 2009

Here’s an interesting trend starting to show up in public employers’ insurance: tying a person’s premiums to their weight. For example, the state of North Carolina will pay 80% of an employees health care costs. But if he or she gains too much weight (or starts smoking), the number drops to 70%.

Lifestyle considerations aren’t new to insurance, but they’ve started to take a center role as prices continue to rise. Alabama–and now North Carolina–are the first states to impose this fat fee, allowing an increase in out-of-pocket expenses for state workers who smoke (without trying to quit) and who are morbidly obese (without trying to lose weight).

The Kaiser Family Foundation has shown that in the past ten years, employers’ premiums have gone up 131%. While insurers can’t say these costs are directly related to obesity and smoking, we do know that a) obesity and smoking are expensive and b) people are fat and smoke, so insurers might as well link the two.

Critics of the North Carolina plan say it’s too harsh. Smokers have already been shifted from the 80% plan to the 70% plan, although the 80% plan is still on the table if they take a smoking-cessation course. Obesity doesn’t kick in until 2011. Workers with a BMI of below 40 can be on the 80% plan for a year, but have to drop their BMI to below 35 or start a weight-loss course. Here’s a chart for reference–40 to 35, the difference of about 30 pounds, seems like a good start to me.

Alabama, on the other hand, is opting to reward the healthy, not punish the sick. State workers pay a monthly premium of $70, but can get a $30 discount for not smoking and soon a $25 discount if they are cleared of any obesity-related risk factors via regular checkups.

I think these are, of course, great ideas. We reward drivers for being safer via their insurance, and there’s no reason why we shouldn’t reward people for being healthier. Safeway has a voluntary wellness plan, in which if employees pass regular tests for obesity-related risk factors, they get a break on their premiums. Their insurance costs have been flat since the program’s inception.

But, an amendment working its way through Congress that would change the level that companies can reward their employees or reduce premiums from 20% to 50% has met some heavy opposition from some big names. The American Heart Association, the American Cancer Society, the American Diabetes Association, and 60 other groups have protested this move. The general consensus is that a policy like this doesn’t encourage healthy behavior, it just punishes people for being fat. I think attitudes like this really play to a weird perception in America that I’ve touched on before, mainly behaviors like smoking are things people  choose to do, but being fat is something they are.

In opponents’ minds, you can punish smokers just as car insurers can punish perennial speeders–it’s a bad habit they continue to exercise. But charging higher premiums for obesity would be like doing the same for a driver who was colorblind; Americans view this as an uncorrectable state of being. This makes little sense to me.

In the end, if obesity is putting a greater strain on health insurers, then the obese should pay their share. Skyrocketing obesity rates and insurance premiums have shown this is a trend, not an isolated incident, and yet few steps have been taken. And, for the most part, people respond to incentives. So forgive me if I’m a little insensitive to the “big boned” defense. Rewarding healthy lifestyles seems like a good thing for the healthy, a good option for the obese, and a smart choice for employers.





Pay-Per-Surf

21 11 2009

A few weeks ago, Hulu sent a proverbial shockwave through the Internet when News Corp.’s deputy chairman announced the ad-supported video site (which features current episodes of on-air shows from NBC, Fox, and ABC, among others) would look to start charging for content in 2010. In particular, the damning quote was that “Hulu needs to evolve to have a meaningful subscription model as part of its business.”

Of course, a week later–perhaps due to the backlash from viewers or simply the comments being wrong—Hulu retracted the statement, noting, “the site remains steadfastly committed to free content [and] any possible subscription or pay-per-view service…would only build upon what Hulu offers.” Sure. Maybe this is true; obviously we have no real way of knowing. But as a business model, the “free” Internet we have grown to love will someday evaporate.

As the newspaper industry continues its downward spiral, the storyline has been “print journalism is dead.” Taken over by the nefarious digital revolution, nobody wants to read a newspaper anymore. Which may be true. But why don’t I have a newspaper subscription? Because I can go to nytimes.com and get it for free.  It’s not that I think The Huffington Post or Politico are bankrupting the New York Times, it’s that their own website is doing it.

And it keeps going. I don’t watch Comedy Central anymore, because I can get the Daily Show and Colbert online. The same goes for ESPN, since espn.com posts video recaps of the games. Actually, I prefer that option; I can essentially make my own Sports Center, cutting out the UFC highlights, the ads, and the Stuart Scotts. And not only does Time Magazine offer all their articles online, they actually supplement the material, with blogs by columnists and photo essays, essentially asking you not to get a subscription.

When providers first started putting content online, the assumption was that ad revenues would offset the lack of subscription. But currently, advertisers just aren’t willing to pay enough for this to work; Hulu (despite the quotes above) has often said they can’t be self-sufficient on ads, nytimes.com concurs. You simply have to look to the Internet’s golden boy, Facebook, to see the limitations of ad-based revenue; the second most trafficked website has yet to find any means of monetizing content, and subsidizes their ad revenues with private investments.

What I think content providers fail to understand is that the next generation of consumers has little attachment to how they intake their media. I’m indifferent toward choosing to watch 30 Rock on TV or online, the same goes with reading the newspaper at my kitchen table or on my laptop. Since the Internet has done a good job simulating the “real” experience, price becomes the main factor. And free is undoubtedly the best price.

Monetizing online content can work, and I think we’ll start to see a greater shift toward it. iTunes resoundingly proved that people are willing to pay full price for the digital experience. The Economist and The New Yorker, arguably the two most intelligent mainstream, weekly publications, have subscriptions in place for their websites—The Economist makes you pay for this week’s articles, The New Yorker just the archives. MLB.tv, NBA League Pass, and ESPN360 are subscription-based sites to stream live sports games. And arguably the best feature from Netflix is not the DVDs to your mailbox, but the vast archives of streaming movies and TV shows that comes bundled with a subscription.

In the end, I think we’re living in the golden age of media on the Internet. I can sit down and watch virtually any TV show, with few ads, on my computer, and read whatever publications I need, all for free. But I think this is one of those times we’ll tell our kids about fondly, not something that continues to be the status quo. Free, professional quality content can’t stay free forever, so watch it while you can.





Countlessly Counting Calories

14 11 2009

On July 19, 2008, New York City took the first great leap toward informed eating. Restaurants with fifteen or more locations would be required to visibly post the caloric content of all regular menu items. This was it. This was the silver bullet, heralded by health advocates as a means of slimming our waists, eating our vegetables, and generally saving Americans from fast food and themselves.

After nearly a year and a half, the first sets of studies from NYC food labeling are in. And the results? Well…what results? The studies have shown that calorie labeling does a whole lot of nothing. Not only have patrons not changed their eating habits, one study shows an increase of 20 calories per meal. And so, the same policymakers once championing calorie counts have quietly slunk back to their drawing boards. In fact, a provision in the House’s health care bill asking for this very change seems substantially less relevant.

The result, it seems, is that a good idea will lose traction thanks to some lackluster studies. This is unfortunate. Menu labeling has loftier hopes than changing the decisions of what you want on your plate; rather, it may change how restaurants perceive their recipes and businesses as a whole.

Menus, unlike the restaurants who create them, do not operate in a free market. There is considerable information asymmetry; restaurants know when you sit at the table, you have no means of determining what’s normal and what’s not. Can you taste the difference between a burger with 200 calories of cheese, mayo, and ketchup and one with 500? I doubt it.

Think of your favorite restaurant, and why you go there—presumably there’s a favorite dish or cuisine, although maybe it’s the value, or even the atmosphere. But the calories? For most people, they’re pretty far from their mind. Thanks to this, restaurants can jack up the calorie content as needed.

But menu labeling adds another depth to consumer preference, and, more importantly, the information you consider when you decide where to eat. Right now, restaurants know you like low prices or meaningful ambience, so they compete with those. But calorie counts could, in the long run, let consumers show preference toward healthier items, incentivizing restaurants to reformulate their menus for this.

Consider The Macaroni Grill, a nation-wide, Italian food chain.  Prior to menu labeling, their scallop and spinach salad clocked in at an astounding 1,270 calories. But when California started talking about calorie counts on menus, the scallop and spinach salad went on a miraculous diet; the dish is now listed at 390 calories.

This is the transformative power of menu labeling; not necessarily allowing people to make better decisions, but instead forcing businesses to. If you were watching your figure, maybe you’d order a spinach and scallop salad. But without knowing the calorie count, unbeknownst to you Macaroni Grill gets to pile on the butter, oil, and whatever other delicious things you probably shouldn’t be eating. The result was healthy eaters were drawn to Macaroni Grill, but eating no different from the rest of us. Competition in calories, though, brings a salad back to where, well, a salad should be.

Granted, menu labeling is, as the studies have shown, obviously not the cure-all to our eating out woes. But in the information era, where 24-hour news leaves no story unwatched and Google proves no answer unanswerable, the least we could do is know a little more about our food. The worst case, as we’ve seen, is…well…nothing. Americans love to eat, and they shall forever persevere and continue to do just that. But perhaps, if calories become ubiquitous, next to décor and daily specials, restaurants will take note and start to shore up their menus. After all, it can’t hurt to try.





The Uphill Battle for Food Reform

8 11 2009

As I’ve written before, so many of the hot problems today can draw their roots back to a dysfunctional food culture–climate change, energy independence, and most importantly health issues and reform. Combating the problem, though, seems like an impossible battle for a few reasons.

Consider first the driving forces for changing how we eat: nobody. Michael Pollan and Mark Bittman write about it, Alice Waters talks about it, but for the most part, nobody is particularly driving to get anything done. This wouldn’t seem so problematic if the competition weren’t so fierce. Huffington Post reported that the recent rumblings of a soda tax have kicked the food lobby into overdrive. They note:

During the first nine months of 2009, the industry groups stepped up their lobbying in Congress. They have spent more than $24 million on the issue of a national excise tax on sweetened beverages and on other legislative and regulatory issues, according to an examination of lobbying reports filed with the Senate Office of Public Records. The review shows that 21 companies and organizations reported that they lobbied specifically on the proposed tax on sugar-sweetened beverages – which among other things would include sodas, juice drinks and chocolate milk.

About $5 million of that money was spent on a national ad campaign, whose backers include “Burger King Corporation, Coca Cola, Pepsico and Domino’s Pizza.” Simply the notion of a soda tax pulls out the deep pockets of the soft-drink, agriculture, supermarket, and fast-food lobbies. Which would be fine, if there were someone spending money on the other side, talking about the amount of sugar in our diets, ballooning serving sizes, etc. etc. But of course, there isn’t anyone.

Part of this, I think, is a failure of organization. The food lobby has a well-defined goal: keep things the way they are. That means companies can unite over soda taxes, agricultural subsidies, and any other threats that emerge. The opposition, on the other hand, is all over the place. The health officials can talk about rising obesity rates, the slow-food and environmental people will point to the carbon footprint of beef or the overall industry, and locavores will opine for more farms and farmer’s markets, but on the whole, nobody is united on any sort of message. And, as the Democrats are making painfully obvious in the health care debate right now, message is the make or break in American politics. Simply put, the average American isn’t aware of any of the problems associated with the Western diet, and food lobby is doing a good job to keep it that way, with an assist from the disjointed opposition.

Moving forward, though, the necessary shifts will prove to be a difficult undertaking. Ezra Klein took Zeke Emanuel (the nice Emanuel) to the White House Farmer’s Market in one of the best reads of the week, and Emanuel laid out some of the hurdles on the horizon. The biggest problem is that right now as a country, we’re set up to easily modify things like health care, but not health, particularly since it represents a shift in behavior, not policy. The obvious blueprint, though, should be the fight against smoking:

The smoking case is an interesting one. Emanuel brings it up repeatedly as one of the few examples where public-health advocates managed to change the culture around a previously unexamined act, which is exactly what they’re going to have to do with diet. “On smoking, there are a combination of things that had to happen,” he says. “We had to make smoking socially unacceptable. We took it outside the building. We raised taxes on it. It became linked to cancer.” But as he admits, “you can’t take eating outside the building.” Nor can you demonize it entirely. Certain products can be attacked, but in a world of organic Oreos and Splenda with added fiber, it won’t just be an uphill climb. It’ll be a climb with constantly changing footholds.

The other major problem raised by the article is the simple fact that Americans don’t want the government telling them what to put on their plate. Which, of course, is a little weird since the government (via Medicare and Medicaid, and who knows, maybe some new reforms) will end up paying for a lot of the consequences. But that’s the reality of the situation.

In the end, the more I think about American food, the bigger a problem it seems. We really have to start from the ground up; there won’t be an easy government fix or bill that puts us on the right path. Instead, it’s about changing relationships, developing a healthy culture, and bringing the complicated connections of what we eat and how we live to a national dialogue.





Devaluaing a College Education: An Introduction to Signaling

31 10 2009

Pew Research posted a graph this week,

Screen shot 2009-10-31 at 8.06.48 PM showing that the rate of 18-24-year-olds attending college has reached an all time high, at nearly 40%. This is, undoubtedly, a good thing. But what implications could this have for those of us currently in college? Let’s look at signaling theory in workforce, theorized by economist Michael Spence.

In the labor market, firms want to hire “good” workers, but they can never be certain of their productivity until they are hired (and often, it still takes considerable time to measure this). Why does this happen? Presumably, there are two keys that determine an individual’s productivity: an individual’s ability (think of this as how smart you are) and effort (think of this as how hard you work). But when a firm looks at prospective employees, it can observe neither of these attributes. Instead, for the most part, all the firm can see are an individual’s age, experience, and education. Although we can’t do much about age, experience and education can be acquired, so they are considered signals. At an early age especially, with experience playing less of a factor, education becomes a heavily weighted signal.

In the hiring process, firms determine what level of education after high school is a good sign of a productive worker–let’s call this e*. Maybe this is 2 years of college, maybe it’s a Bachelor’s degree, who knows. But firms can now distinguish between good and bad workers, since presumably the good ones are at e*, and hire these (or pay the good more than the bad). In this case, additional schooling does not enhance productivity, it merely signals higher ability. This should make sense; presumably those who have higher ability are those who are most likely to succeed at education.

But what happens if attaining e* is easier? With e* easier to achieve,  more people will pursue it, including unproductive workers. When this happens, e* ceases to be an effective signal, failing to distinguish between the good (highly productive) workers and the bad (less productive) ones. If this happens, then e* shifts up; if having a Bachelor’s degree used to mean having e*, now it may mean having a higher degree (e.g. a Masters) or more professional qualifications.

Now let’s bring this back to the graph at the top of the post. If signaling theory holds, then the increasing rate of college attendees doesn’t bode well for the coveted Bachelor’s degree. As more college graduates enter the job market (particularly one as tight as our current market), a diploma may signal less than before. And, as previously mentioned, this may push education demands upward; an advanced degree may be the standard endpoint for entering the job market, community college may be the minimum needed to get hired, not a GED. Now signaling theory is not without its flaws or detractors, but the general framework paints an interesting picture for the future of higher education.





Questioning the Minimum Wage

24 10 2009

Last week, Colorado decided to do something revolutionary: they decided to pay people less. Since the formation of the federal minimum wage in 1938, never before has a state chosen to decrease it, but that’s exactly what Colorado will do. Now, the drop is small—from $7.28 to $7.24—and since the federal wage is $7.25, workers will really only see a reduction of three cents, but the move brings with it a greater question. That is, in a time of economic turmoil, with unemployment climbing toward ten percent, what are we doing with a minimum wage in the first place? The Obama administration, looking for any means of healing the economy, has clearly overlooked the harms of a minimum wage.

Championed as a means of putting money in the pockets of the poor—those on the fringes of the labor force—the minimum wage may achieve that for those employed, but keeps many more unemployed. Employers see wages as no different from any other good; as labor costs more, employers are willing to buy less and less of it. But the allure of a (relatively) hefty $7.25/hour draws people into the job hunt, increasing the unemployed. Clearly something needs to give.

Now many proponents of the minimum wage say that if it hurts anyone (which, of course, it doesn’t), the burden falls only on teenagers. After all, who else is working the part-time, fast food counter jobs apart from teens? Unfortunately, the spillovers aren’t so cut and dry. As funds get shifted around to accommodate the minimum wage, there are other implications. Some workers will have to work shorter hours, or see cut benefits, or lose the opportunity for paid training. Perks like employee discounts evaporate as money gets tight. And in a true manifestation of the free market, some jobs simply evaporate when the alternative is cheaper: think of the proliferation of self-checkout grocery scanners versus a real person.

In thinking of the long-term health of the economy, minimum wages are even more damning. It’s no secret that the easiest way to get a good job tomorrow is to have any job today. Employment provides experience and technical skills, which can be translated into higher wages farther down the line. But the minimum wage serves as a roadblock, preventing many people from being exposed to any of these experiences. Unfortunately though, as the economy recovers, we will have a nation of people just entering into low-skill and minimum wage jobs, rather than a labor force transitioning out of these.

Consider also that much of the Obama stimulus was focused on getting money into the pockets of Americans. What better way to do this than to employ as many people as possible? Now granted, equilibrium minimum wage would drop—from $7.25 to maybe $6.50 or $6.00. But, in such a time of such economic tension, I, for one, would rather see unemployment at 4.5%–with the labor fringes making $6.00/hour–than the current 10% unemployment at $7.25.

Moreover, we know money has a multiplying effect on the economy. One dollar doesn’t simply help the GDP by one dollar; one dollar, used to buy fries at McDonalds for example, pays part of the wage of the cashier, who then takes some of that dollar and buys a haircut, where the barber then takes some of the remaining dollar and buys a newspaper, and so on. Much of what the stimulus package tried to accomplish was using these multiplier ideas, but this was accomplished through government spending, potentially running large, damaging deficits in the future. An easier way to harness this multiplier simply comes about by employing more people. A large infusion of capital into the economy comes as just one of the many benefits.

In the end, the notion that jumpstarting the economy by weakening the minimum wage may seem counter-intuitive. On the surface, the last thing anyone would want to do in a time of economic turbulence is to give workers less money. And yet, that may just be the right answer, since reducing the wage comes coupled with increased employment, an infusion of capital, and the potential for higher future wages.





Curbing America’s Insatiable Appetite

10 10 2009

As the health care debate rages on in Congress, with members trying to find some semblance of compromise to bring affordable insurance to a majority of Americans, the elephant in the room, the unasked question, is “how did we get here?” Not how did we reach a point where so many Americans are without health insurance per se, but rather how did we arrive at a time when so many Americans need health insurance. This is not to discredit the benefits and desires of being insured, but instead call into question the whys: why is American health care strained to the point of failure, and more importantly, why do Americans spend $2.3 trillion on health, nearly twice per person than most European countries (“Big Food vs. Big Insurance”). Unfortunately, the bulk of the answer is fairly simple, and nearly impossible to correct overnight: the American diet. As a country, Americans are annually spending $147 billion on obesity treatments and $116 billion on diabetes, among others (“Big Food”). The CDC estimates that over the past 20 years, 30 percent of the rise in health care can be tied to one culprit—obesity (“The Impact of Obesity on Rising Medical Spending”).

Even if health care reform passes, the American diet is not a problem that will fade into the night. Over the years, the government has taken few steps to provide any impactful resolutions on informing America’s diet; while nutritional labeling and food pyramids may be helpful, they so far have come nowhere close to curbing America’s insatiable appetite. Rather, lawmakers may need to explore different means of shaping our relationship with food; particularly by  economic policy. A largely untapped wealth of economic ideas exist to steer Americans toward a healthier future, and based on varying degrees of merit, many should be considered.

The concept that prompted this discussion on the overlap of health and economics, and a notion quietly gaining momentum in Congress and the White House is the idea of a soda tax. The reasoning behind taxing soda and other sugared beverages, versus say potato chips, is fairly simple. The USDA notes that:

Calories consumed from beverages as a portion of Americans’ total energy intake have almost doubled in the past 40 years…in 2002, 21 percent of total energy intake is from beverages.

Dave Leonhardt, an economics columnist for the New York Times, expands on this idea, writing “the typical person now consumes 190 calories a day from sugary drinks, up from 70 a day in the late 1970s” (“Sodas a Tempting Tax Target”). While the soda industry can argue that this increase in beverage consumption, when coupled with a corresponding decrease of other foods, provides no negative consequences, studies have shown this is hardly a reality. The USDA report continues:

Increased calories consumed as beverages may not lead to reductions in calories from solid food and in fact may be consumed in addition to whatever calories come from solid foods leading to increased energy intake and weight gain.

So far, most of this should come as no surprise. We know soda has become ubiquitous in the American diet, and we presumably are aware that ordering a 20 ounce Coke with dinner has never made anyone more likely to order a salad to go with it. The question now turns to what can be done.

If any soda tax bill were to emerge in Congress, it would most likely add one cent per every ounce of soda. A two-liter (67.6 ounces) bottle of soda, which sells for about $1.35, would instead sell for $2.03, a 50% increase in price, while a 12-pack of cans, averaging $3.20, would rise to $4.64, a 45% increase (“Proposed Tax on Sugary Beverages Debated”). A tax this high would produce a markedly different beverage landscape. Studies have shown the price elasticity for sodas is about 10%; in other words, a 10% increase in the price of a soft drink corresponds to an approximately 10% decrease in consumption (“Proposed Tax”). A 50% drop in soda consumption would bring with it a reduction of nearly 100 calories a day from the diet, or 5% our recommended daily intake, easily a non-trivial amount.

The concern, though, rises when we consider the overall purpose of a soda tax. The dialogue has transitioned from “how can we reduce American obesity?” to “how can we raise revenue in an effort to reduce American obesity?” Policymakers are particularly fixated on revenue, as they search for avenues to fund the $700-800 billion price tag surrounding health care reform. While a soda tax would generate money to be reinvested into health and reduce some unnecessary consumption, it still belies the “whys” of this debate, particularly “why has American obesity increased so dramatically?” Ultimately, the answer to that question is not “increased soft drink consumption;” soda remains just one of the many cogs in the problematic Western diet. One of the goals in reforming how Americans eat should be helping us identify where we went wrong in the first place. In this respect, the narrowness of a soda tax falls embarrassingly short. From the standpoint of economic policy aimed at curbing weight gain, a soda tax sends a tame indictment of our overall diet.

On the whole, the soft drink tax is a politician’s ideal solution to a massive problem; easy to conceptualize, having a clear villain and outcomes, and being relatively simple to implement, Americans can get behind the tax. But as we have seen, the results are more concerned with revenue than health and lifestyle changes; a soda tax is the Band-Aid to the enormous gash that is the rising obesity levels. If the politicians are incapable of thinking broadly, we should instead turn to the nutritionists.

Ask the average consumer how much corn he or she eat in a day, and the answer should be fairly low–perhaps a handful of popcorn or some kernels in a bag of frozen, mixed vegetables, but nothing particularly drastic. This is, sadly, a resounding underestimate. Consider a McDonald’s Happy Meal: corn almost exclusively fed the cows that formed the beef patty, corn oil served as the medium to cook the French fries, and the dirty, four-letter word HFCS–high fructose corn syrup–sweetened the soda, the hamburger bun, and the ketchup, among others. Corn (along with soybeans, which represent a large portion of the non-corn oils used in commercial cooking) has slowly crept into the American diet as a substantial player. In his novel In Defense of Food, Michael Pollan notes:

A century ago, the typical Iowa farm raised more than a dozen different plant and animal species: cattle, chickens, corn, hogs, apples, hay, oats, potatoes, cherries, wheat, plums, grapes, and pears. Now it raises only two: corn and soybeans. This simplification of the agricultural landscape leads directly to the simplification of the diet, which is now to a remarkable extent dominated by…corn and soybeans (116).

The proliferation of corn and soybeans has drastically changed our caloric intake; on average, Americans consume 554 calories of corn and 257 of soybeans per day (Pollan 117). HFCS, in particularly, has a nasty habit of appearing many places you would least expect it; flip over the labels of your yogurt, wheat bread, or granola, and chances are good HFCS is lurking among the ingredients. While corn remains relatively harmless in small quantities–as with most foods–health problems emerge from overconsumption. And given the prevelance of corn in nearly all commercially processed foods, particularly through the sneaky nature of HFCS, avoiding this overconsumption proves to be a difficult task.

But why has corn transformed our agricultural and dietary landscape? The answer is one of relative pricing. Leonhardt compiled a chart showing the growth of various foods relative to the Consumer Price Index (CPI):

Over the past 30 years, the prices of fruit and vegetables have grown 40-45% faster than the average basket of goods, while the price of soda (which directly depends on the price of corn) has dropped 30%. No wonder restaurants and manufacturers have gravitated toward corn: amid the rising cost of living, corn gets cheaper and cheaper. But if this answers the question of “why corn,” a new question emerges, namely “why cheap corn?” The fault, unfortunately, lies with economic policy.

In 2002, President Bush signed a 10-year, $190 billion farm bill that continued the US tradition of subsidizing corn farmers. Currently, a farmer will produce a bushel (56 pounds) of corn for a little over $3, which the market will then buy for $2 (“When a Crop Becomes King”). The price difference comes from an annual $4 billion subsidy to farmers, allowing them to produce more corn and cheaper corn than the market demands. In turn, artificially lowering corn’s price makes cheap corn the obvious means of production for food manufacturers: corn-fed beef overtakes its healthier, costlier grass-fed cousin, and the price of HFCS-sweetened anything drives well below otherwise-competitive, healthier alternatives. In fact, in the past 50 years, real corn prices have fallen over twice as fast as real sugar prices (“Sweetening the Pot”). Moreover, consider a study done by the Institute for Agriculture and Trade Policy (IATP): they found that “reducing the vending machine prices of low-fat snacks by 10%, 25%, and 50% increased their sales by 9%, 39%, and 93%, respectively. When prices were raised back, consumption declined substantially.” Simply put, products sweetened with HFCS are winning an unfair fight with an assist from the American taxpayer. This is not unique to sweeteners; cheap corn oil begets cheap, abundant fried food, and artificially cheap beef finds its way onto the table more often than necessary. Ultimately, subsidies skew the principles set forth by supply and demand; when a consumer eats HFCS-sweetened food or others benefiting from corn inputs, he or she does not pay the equilibrium price of the good, and as a result, over-consumes.

The solution to our corn-crazed society epitomizes “easier said than done”: kill the subsidies. The Global Development and Environment Institute estimates from 1986-2005, the implicit subsidy of HFCS (via the direct subsidy of corn) saved HFCS producers $4 billion and soda manufacturers an additional $1.7 billion (“Sweetening the Pot”). Though numbers like these are not available for oil or meat producers, the trend is presumably the same: subsidized agriculture has led to cheaper food and wider waistlines. Unfortunately, the farm lobby and the food and beverage lobby wield substantially more sway in Congress than the virtually non-existent health food lobby. Corn has ingrained itself into our diet, and will require a substantial cultural shift to prompt its removal. But as we begin to shift toward a society more focused on health (to which rising obesity rates will inevitably lead), Americans will begin to take a harder look at where the problems arose, with corn subsidies standing front and center.

The most important takeaway from discussing America’s diet is that, as with most public policy topics, there remain an infinite number of good solutions worth exploring. While soda remains on the tip of the tongue for politicians, as does corn for nutritionists, a myriad of options still remain unexplored. Consider a few other ideas:

  • Menu Reform: As much as Americans consider themselves in control of their own kitchen, step into a restaurant and the floodgates spring open. Much of this can be owed to information asymmetry; restaurant patrons, for the most part, have no way of knowing what and how much of it is in their food. Studies have shown that “a typical restaurant meal has at least 60% more calories than the average meal made at home” (“Survey: Restaurants dishing out extra-large portions”). Unfortunately, diners have proven ignorant of increased portion sizes. A study at Penn State “found that consumers who were given 50 percent more of a pasta dish ate 43 percent more than those with a smaller portion” (“Will Diners Still Swallow This?”). But what if we leveled the informational playing field? New York City has begun mandating chain restaurants print calorie counts on the menu, other restaurants like California Pizza Kitchen (CPK) have voluntarily followed suit nationally. And the bloated portions? Imagine if economic policy threw its weight around; perhaps an excise tax on extra portions, 2% for every subsequent portion.  That would be 2% on meals twice as large as recommended, 6% on the 12-ounce steak (serving size of 3 ounces), and 10% on CPK’s six-slice barbecue chicken pizza (whose menu, in fine print, states one serving is only one slice).
  • Starting Early: What is painfully obvious living among college students, most cooking on their own for the first time in their lives, is that this generation has lost a connection with food. We love to eat, yet are unwilling (or incapable) of providing food for ourselves. In elementary schools—and in fact the entire education system—government has an opportunity to mend this. Congress has already discussed banning soda and junk food from our schools, but we should be more focused on the dos than the don’ts. Alice Waters uses the phrase “edible education;” school curriculum should emphasize the chemistry in cooking, the biology in gardening, and the math in measuring. Most importantly, at a young age, we need to change the cultural landscape of our diet, shifting the overall emphasis from food to cooking, from knowing what’s in our mouths to knowing what’s on our plates.
  • Simplify: Finally, good food needs to be easy. We often choose the trash foods because they are on-hand and familiar. But imagine if the government provided grants for cities to establish four-season farmers’ markets, mandating each be equipped with credit card scanners. Or if  subsidies emerged for farmers who grow a variety of crops, creating price competition between real food and corn-fed food. Especially though, make sure we would rather cook than eat out; forgive federal loans for culinary-school graduates who work with children, minorities, or obese populations, bring cooking classes to public, post-secondary institutions, and ensure that Americans are always aware of what and how they eat.

In the end, the concerns facing the American diet are daunting, to say the least. But take a step back, and consider other problems of modern society: rising health costs (many of which, as has been shown, are tied to poor diet), deteriorating environmental quality (the U.N. estimates 18% of greenhouse gases come from livestock), and a desire for energy independence (food production uses 19% of the nation’s fossil fuels, more than any other sector). The demands of our diet, and the impacts of our food are far from isolated. As we move forward, food must take a pronounced role in our national dialogue as we begin to understand the effects of what we eat on how we live.