food politics

The Soda-Ban Lessons Bloomberg Can Learn From Denmark’s Failed Fat Tax

Is that glass half-full?

Is that glass half-full?Photo: Nicoloso/Corbis

Whither Bloomberg's soda ban? While companies (predictably) head to court to prevent the ban from even happening, Bloomberg might want to look to the demise of a similar health initiative — in Denmark, of all places.

In October 2011, Denmark implemented a tax on all foods with more than 2.3 percent saturated fats. The idea was straight out of Economics 101: If you want less of something, tax it. By raising the price, you reduce demand, and with less demand comes lower consumption. In theory, everybody benefits: The populace becomes healthier, the government gets much-needed revenues, and the financial and societal costs of looking after an increasingly obese population would go down.

But this fall, only a year after the tax went into effect, Denmark abruptly got rid of it.

The problem was that people didn't buy less of what they wanted — they just went elsewhere to get it: Rather than pay inflated prices in Denmark for goods like butter, bacon, and cheese, many Danes simply hopped the border and did their grocery shopping in Germany or Sweden instead, hurting Danish small businesses in the process. The country's largest dairy company estimated it lost €670,000 during the year the tax was in effect.

Nobody's going to go to New Jersey just to get a large soda, and an analysis from NYU found that even people who might want 32 ounces of soda, an amount over the limit, are unlikely to buy two 16-ounce drinks to get there. But it's unclear if banning soda will have any larger health benefits: A study tracking the weight of people who switched from regular soda to diet soda found that they actually gained weight, since they ended up getting more calories elsewhere. It turns out that humans are surprisingly resourceful when it comes to finding ways to make themselves overweight.

The Bloomberg soda ban has another problem: the absence of any financial incentives. Even though Denmark's tax failed, at least it brought in $216 million in new tax revenue. (Denmark also scrapped plans for a sugar tax.)

In Denmark, it became clear that instituting behavioral incentives from above is more complicated than it seems, especially if the population isn’t onboard. So far, most New Yorkers oppose the soda ban. For something like this to succeed, Bloomberg must work with the population to craft a plan that has public support rather than announcing it as a fait accompli.

It’s true that Bloomberg outpaced public opinion with the smoking ban: It was unpopular when it was introduced, but soon New York grew to love it. With the soda ban, however, there's nothing tangible to love: No bars smell nicer; no clothes last longer between needing to be dry-cleaned. At best, it will shave a few percentage points from the city’s mortality and obesity rates — a worthy goal, but not one that will placate the annoyance of a moviegoer who really wants a soda that is three times larger than the capacity of the human stomach.

It's all constraint with no visible benefit. What Denmark's fat-tax failure proved in very real, nontheoretical terms is that government edicts won't do much to change people's unhealthy eating habits; people will simply adjust their diets to potentially take in the same number of calories. Improving the health of New York City will have to be done slowly and carefully, instead of 64 ounces at a time.

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