Staring at the menu board on a recent and rare trip to a California fast-food chain, I was stunned by the cost of a milk shake: 880. Eight dollars for a milk shake, really? Well, no. That was the cost in terms of calories. But I would have gladly traded that in dollars and cents to be spared the knowledge of how many calories my post-triathlon race reward would cost me. Feeling sufficiently guilty once confronted with the calorie content, I downsized and saved a couple hundred calories. But I left feeling dissatisfied and unambiguously worse off.
This kind of experience could be coming to a restaurant near you by January, when the FDA plans to roll out mandatory calorie labeling regulations approved by Congress in the same bill that authorized ObamaCare. At chain restaurants with more than 20 locations, you won’t be able to avoid the calorie information, which is prescribed to be posted on menus and menu boards near prices and printed at least as large. So much for the days of blissful ignorance.
While the calorie labeling law is intended to improve health outcomes for individuals, it is effectively a government-mandated guilt trip and a sign that libertarian paternalism—the seemingly benign notion that “choice architects” can “nudge” people to make better decisions for themselves—has gone too far.
Economists have long-recognized the importance of information for ensuring well-functioning markets. Price information supports competition as consumers reward low-cost retailers. In the same way, information on product quality causes firms to up their game—making better products. And information about product attributes helps consumers make better matches between their needs and preferences and the offerings of firms. Incomplete information can be costly, leading to monopolistic prices and even the collapse of entire markets. In short, economists value information as the grease that makes the markets run.
So how can a self-respecting economist object to calorie labeling mandates, like those already imposed on chain restaurants in California and New York? The answer lies in the distinction between mandatory information provision and mandatory information consumption.
A policy of mandatory information provision would require restaurants to measure the calorie content of their menu items and make that information available to customers upon request—perhaps on a separate brochure at retail locations. Consumers could then make better-informed decisions at their discretion, weighing tradeoffs between taste and calories as they deem appropriate. Such an intervention would likely be welfare improving—the benefits to consumers from being armed with calorie information at their own choosing could very well outweigh the cost to restaurants of measuring calories and publishing the information.
The cost-benefit calculus for mandatory information consumption, however, is much less clear. What is clear is that it is likely inferior to mandatory information provision because it imposes extra costs on consumers and restaurant owners with no gain in consumer benefit: those who care about calories have access to the information either way. Regulations that force restaurants to post calories on menu boards like they post prices likely raise the cost of compliance relative to the less-intrusive alternative by requiring that all menus be updated as opposed to supplemented by separate calorie menus.
The real added cost of mandatory information consumption rules, however, is the one imposed on consumers who prefer not to know the calorie content of their meal choices. If calorie costs bombard them every time they look at a menu, these individuals are made unambiguously worse off because the government makes them feel guilty for the choices they make. This is a very real cost imposed on consumers that is completely avoided if regulators merely require restaurants to provide information as opposed to requiring diners to consume it. The Harvard economist Ed Glaeser has characterized the calorie labeling law as a “revenue-less tax.” Indeed, much like a tax on soda or cigarettes, labeling requirements raise the cost of consuming foods, particularly ones that taste good. Cleverly disguised, however, the opposition to a labeling law is likely to be less.
Existing research suggests that the benefits of such a revenue-less tax are minimal. Stanford economists, for instance, show (ungated version here) that New York’s law reduced calorie consumption per transaction at Starbucks by a mere 6% and didn’t change drink consumption at all. Tracking the purchases of anonymous Starbucks cardholders, they found no change in individuals’ common drink orders that could be attributed to the law. Mandatory calorie labeling in NYC, they estimate, reduces long-term body weight by less than 1%.
In the absence of a strong claim that mandatory calorie labeling improves welfare for a majority of Americans, surely the libertarian policy among these alternatives is to make information available to consumers, but to permit them to avoid it if they so choose. After all, the government has very little leeway to make us consume anything. And the notion that government should impose guilt on its citizens must be girded by weaker philosophical principles than those that support libertarian paternalism.
What comes next? When you buy a Cadillac Escalade, will you be confronted not just with the new EPA label telling you how green your car isn’t, but also with an admonition that savings from the cheaper Chevrolet Tahoe would be sufficient to equip 2,300 African children with malaria nets and possibly save their lives? Or will they tell your risk of killing someone in a sedan during a head-on collision is three times higher than if you drove a Toyota Camry?
When you sit down to watch your DirecTV NFL Sunday Ticket, will a government ad warn you that consumption of that product could lead to weight gain, intoxication, diabetes, and heart disease? Or will they admonish you during halftime that if you skipped the rest of the game and went out for a run, you could burn 1,400 calories?
Will the government stick grotesque photos in your face when you buy a package of cigarettes? Oh. Wait . . .
There is nothing libertarian about mandating information consumption. And making people feel guilty just seems paternalistic. The causal-chain from mandatory information consumption to improved health outcomes is so weak that one wonders whether it is worth making people feel bad about themselves—especially when better alternatives exist.
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No one makes someone else feel guilty. That’s all you.
By the way too – the research you cite suggesting an only 6% decrease in calories looked at all comers. When you actually crunch the numbers based on people who care about calories and weight (like you it would seem), the impact’s much higher, and of course it also wouldn’t capture the folks who when faced with the caloric realities of their fast food choices, decided they weren’t worth it and stopped going.
Providing consumers with information is what mandated calorie counts are for. What you do with that information, and how it makes you feel – well that’s personal.
Well-loved. Like or Dislike:
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Exactly. More efficient free markets are good except when they hurt my feelings?
Big Bad Government is not “forcing” you to feel bad. If you just did a triathalon, you have nothing to feel bad about, drink the shake in all its 880 Cal of glory!
It may be a shock the first time you see it, but if it becomes the law of the land people will either learn to ignore the calorie counts and go on with their lives, or they will alter their behavior patterns to avoid guilt and maybe loose a few pounds as a side bonus.
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Or even better, restaurants begin to compete on calorie content. The whole point of making calorie counts as visible as prices is because when those counts were hidden restaurants didn’t have to compete on offering value for calorie cost. Now they will and the health costs of food will be driven down just like regular costs.
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Calorie counts are not always indicators of whether or not a food option is “healthy.” A glazed donut from Dunkin Donuts is 180 calories. An egg white omelet with reduced fat cheese is around the same or slightly more, depending on what calorie counter site you look at. However, the donut is 180 calories of lard and sugar, while the egg white omelet is significantly richer in nutrients… that’s one of the fatal flaws of the argument that mandating calorie counts gives consumers the information they need to make healthy choices- it gives some information, but it doesn’t give ALL the information, and sometimes the information it does give can be misleading, allowing people to believe they are making good choices when they’re really not. Shall we require that ALL nutritional information be posted on menu boards, in order to give consumers ALL the information they need to make good choices?
Very week argumentation. The example of Starbucks doesn’t make sense in this context as Starbucks is the sort of place where people order the same thing every time. Displaying calories is unlikely to change old habits but might have a big influence on ‘new’ choices. Just like it did in the case of the author who went for a smaller ice cream. And in the long-run producers will have an incentive to produce low-calorie products to avoid making their customers feel guilty.
Well-loved. Like or Dislike:
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I think the label ‘libertarian’ paternalism is a little misleading. Aren’t Libertarians the ones saying we need less regulations?
I would suggest the use of the term ‘liberal’ or ‘excessive’. These terms I think suggest the more overbearing nature of this onerous requirement. Libertarians believe in people searching out information if the individual chooses, not the mandate the suppliers throw it in your face.
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Calling this “libertarian paternalism” is an oxymoron, just like “jumbo shrimp”, “military intelligence”, “politically correct” and “educational television”.
Governments are forcing restaurants, by law, to put calorie counts on menus, and that is as antithetical to libertarianism as you can get.
Libertarians want the restauranteurs to have the choice of whether to include calorie counts on their menus, so the customers can have the choice of eating at a restaurant that does so, or one that does not, depending on their personal preference.
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And restaurants should be free to make their foods as addictive as possible and customers should be free to choose if they want to be addicted or not!
Well-loved. Like or Dislike:
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No.
Government dictating the content of food is as antithetical to libertarianism as you can get. Government dictating that you provide factual information to your customers, such that customers may then make informed decisions, is paternalistic. But about at minimally paternalistic as you can get. It enhances choice. Thus, “libertarian paternalism.”
Well-loved. Like or Dislike:
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You forgot my favorite example of oxymoron, “vacation bible school.”
Well-loved. Like or Dislike:
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After New Years, I plan to just stop eating.
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Actually, the paternalism is yours, my dear Mr. Sexton. It seems you are assuming that us “children” should not be bothered with important information until we are mature enough to ask for it. I’m sure cigarette manufacturers would agree with you. They would be delighted to avoid the Surgeon General’s Warning and instead place a label that says, “Visit http://www.cigarettes.com for more information about cigarettes.” Ha!
Of course, I know your heart is in the right place. But maybe what you are really feeling is just adjustment pains to a new reality. Ten years from now, when it is common for foods to have such nutritional information posted, it will not be given a second thought.
In any case, I think we should assume that we SHOULD always seek to provide the consumer with reasonable information…then allow the consumer to do as he or she wishes. To withhold information is to either cynically exploit the unknowing consumer…or to believe that consumers “can’t handle the truth.”
I might point out that casinos rely on cynically exploiting the unknowing consumer. If each game had a sign that said, “Your chances of winning are 30/100,” it would put some games out of business or demand more compensation for the risk undertaken, I imagine.
No, let’s not get into all the legalese to cover our behinds, but let’s be upfront with the consumer, trusting that a consumer has some degree of commonsense or moderation.
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Knowing the odds gambling, hasn’t changed the state lottery system or put it out of buisness, even though it would be tough to find a game in Vegas more rigged against you.
There are reasons for that though, which have been studied ad nauseum. 1) The majority of lottery ticket consumers are not financially successful, hoping it will return a major payday to pull them out of the slump. 2) Most consumers don’t understand the long-terms savings to be gained by simply not purchasing that ticket and creating an account or some means to hold on to the money instead. 3) Many of the consumers find it fun, augmenting their utility, regardless of success.
This is very different from a casino where you will find some of the above types of people, but not nearly as concentrated a group.
I don’t think the Libertarians are the ones who are mandating calorie counts. Therefore, the libertarians aren’t going too far in this case.
To say that Libertarian Paternalism is going to far in an unfortunate headline.
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Waaaaaaa! Knowing stuff makes me feel bad! I don’t wanna know!
It isn’t the government’s fault that you feel guilty about having a milkshake.
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