Wednesday, 5 March 2014

Curbing Sugary Drink Consumption in New York City

By Shi-Ling Hsu, Tyler Fleming, Kaitlin Monaghan, Ian Carnahan, Kevin Schneider, Shannon Mathews, and Kevin Alford

A paper has been posted on SSRN which performs a rough cost-benefit analysis of sugary drink regulation in New York City. Why New York City? Because former NYC Mayor Michael Bloomberg caught all kinds of flak from all kinds of groups for trying to clamp down on soda consumption in the Big Apple (which is not named the Big Soda). Opposition from the National Restaurant Association, or the movie theater industry is expected. But opposition from the New York Chapter of the NAACP is surprising, since African-Americans suffer disproportionately from the ill effects of excess sugary drink consumption: obesity, coronary heart disease, and type 2 diabetes. While the overall obesity rate in New York State is 23.6%, it is 26.3% for Hispanics and 32.5% for non-Hispanic blacks. Rates of diabetes are twice as high for Hispanics and non-Hispanic blacks as for whites. But this ganging-up on Bloomberg, whose imperial instincts do him no favors, has been all heat and no light. One question that we really should be asking (among others) is this: does sugary drink regulation generate more health benefits than it costs sellers?

The answer is almost certainly a strong yes. Our study finds that the costs of a total ban on sugary drinks in New York City would top $500, and is unlikely to approach $1 billion annually. (Such a total ban is fanciful, but it would have been too difficult to do a cost-benefit analysis of Bloomberg's actual rule, the Portion Cap Rule, which limited the size of sugary drink sales to 16 ounces in many locations.) On the other hand, we estimate that such a ban would generate health benefits ranging from $3.2 billion to over $13 billion. These large numbers are largely driven by the premature deaths attributable to sugary drink consumption. A certain number of cases of obesity, coronary heart disease, and type 2 diabetes are attributable to sugary drinks; so, too, are a certain fraction of deaths from these same diseases. These account for most of the costs of sugary drink consumption.