U.S. calorie count rule is no pleasure for junk food businesses
U.S. health regulators estimate that consumers will suffer up to $5.27 billion in “lost pleasure” over 20 years
U.S. health regulators estimate that consumers will suffer up to $5.27 billion in “lost pleasure” over 20 years when calorie counts on restaurant menus discourage people from ordering french fries, brownies and other high-calorie favorites.
The lost-pleasure analysis, which is criticized by some leading economists and public health groups, was tucked into new regulations published last month by the U.S. Food and Drug Administration which require chain restaurants, grocery store chains selling prepared food, large vending machine operators, movie theaters and amusement parks to display calorie counts.
Public health advocates alerted Reuters to the inclusion of the analysis, which they say makes such regulations more vulnerable to challenges by industry because it narrows the gap between the government’s projections of a regulation’s benefits and costs. Amit Narang, an attorney at Public Citizen, said the lost pleasure calculation could help companies or trade groups to challenge the menu rule in court.
Peter Larkin, chief executive of the National Grocers Association, warned last week the calorie count regulation would impose “a large and costly regulatory burden.” Laura Strange, a spokeswoman for the group, said the grocers would work with supporters in Congress to change the rule, but declined to say whether they would cite the lost pleasure factor.
The FDA said the analysis balances the benefits to consumers when calorie information leads them to eat healthier with the sense of deprivation people may feel when they give up foods they enjoy. The new rule takes effect in a year.
“It increases the quality and objectivity of the analysis of estimated benefits,” said FDA spokeswoman Jennifer Corbett Dooren.
The agency does not believe its use has weakened the menu regulation, since the projected benefits still outweigh the expected industry costs and any lost pleasure combined, she said. At the low end of its estimates, FDA projects that the menu rule will bring net benefits of about 10 cents per person per day.
The FDA did not name or make available the staff economists who conducted the analysis.
Their work is based on a concept called “consumer surplus” long employed by economists to calculate benefits people get from various goods and services which may not be fully captured by market prices. For example, if a government turned a playground into an industrial park, or banned pizza, the pleasure people lose from not having the park or eating a slice counts as a “cost” of the action.
But some leading economists say there is no justification for the FDA’s application of consumer surplus to calorie counts, since the government is not banning a product but just making information available.
Consumers who eat healthier as a result “are presumably doing so because they are now better informed,” said Kenneth Warner of the University of Michigan, one of the nation’s leading experts on cost-benefit analysis. Anything a consumer freely chooses should not be treated as a forced loss of pleasure, he argued.
According to FDA documents, for the lost-pleasure analysis the agency relied almost solely on a 2011 paper by then-graduate student Jason Abaluck. In an interview, he defended the FDA’s decision to reduce its estimate of the health benefits from labeling in part because “healthier foods are worse off on other dimensions such as taste, price, and convenience.”
A revised version of the paper will be submitted to a peer-reviewed journal soon, said Abaluck, who now teaches at the Yale University School of Management.
Brownie or apple?
In May, Reuters reported that the FDA had applied the lost-pleasure factor when analyzing its proposed rules on electronic cigarettes. Agency economists said factoring in the sense of deprivation smokers would suffer reduced the benefits of tighter regulation by 70 percent.
In a public comment on the proposed rule sent in August, nine leading economists including Jonathan Gruber of MIT and Thomas Schelling of the University of Maryland, said there was no economic basis for using consumer surplus in that case, partly because smoking is addictive rather than voluntary.
In its analysis of calorie counts on menus, the FDA projected that the rule would lead to fewer cases of obesity, Type-2 diabetes and heart disease, fewer medical costs to treat those diseases, and less suffering as a result of developing those conditions. It estimates the total economic value of those benefits at $5.3 billion to $15.8 billion over 20 years. The range reflects the uncertainty in how much calorie counts on menus will change people’s behavior.
The agency also put a dollar value on the lost enjoyment consumers might feel if the calorie figures made them avoid certain foods, such as an 800-calorie brownie, in favor of, say, a 100-calorie apple. The calculation does not include any gain in immediate pleasure if the consumer enjoys the apple more than the brownie or feels virtuous for healthier eating.
The agency’s economists estimated the lost pleasure at $2.2 billion to $5.27 billion over 20 years. That range reflects the imprecise science of assigning dollar values to lost enjoyment, they explained. They then subtracted those sums from the rule’s estimated benefits, cutting them significantly.
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