The unintended consequences of the recession
Kai Ryssdal: Time now for a little Freakonomics radio. It’s that moment every two weeks where we talk with Stephen Dubner, the co-author of the books and blog of the same name, it is about the hidden side of everything. Dubner, you know what — I’m especially glad to have you back this week. You know why?
Stephen Dubner: I know why.
Ryssdal: You do. You sent me something. I love it when you send me something.
Dubner: What can I tell you, I am benevolent fella. Go ahead, Kai, open up your little package.
Ryssdal: All right, here we go. It’s a little bubble-wrapped envelope, with an envelope inside. Very careful. OK. So it’s a pack of Marlboros. And I don’t smoke, dude.
Dubner: Believe it or not, I’m trying to help you stay trim. I want you to listen to Kip Viscusi, who’s an economist at Vanderbilt who studies smoking.
Ryssdal: All right.
Kip Viscusi: Well one thing is that if you give up smoking, you’ll gain some weight. May not be enough to make you morbidly obese, but it’ll make you a little heavier.
Ryssdal: So here’s the hidden side, right? It’s the unintended consequences of quitting smoking.
Dubner: You’re learning, my friend.
Ryssdal: How long have we been doing this segment?
Dubner: Couple years, but you’re getting there. So our smoking rate in this country has been falling dramatically, which is fantastic news, but there’s a hidden side to that — as if with everything. Now, I’m not saying that smoking is a good way to fight weight gain — let me be clear: it is not, and smoking is bad for you. But this is an instructive lesson about trade-offs, because I want to talk today about another weight-related trade-off, having to do with the economy. So Kai, let me ask you this question: What do you think the Great Recession has done to our collective waistline?
Ryssdal: Well, I’m going to go with my gut: It’s a bad thing, right, because people are going to McDonald’s for the dollar menu and all that stuff, and thus we’re getting fatter.
Dubner: That is a fantastic guess. And you may be right this time.
Ryssdal: But some wrong.
Dubner: Usually you are, but some research suggests that you may be right. But other research suggests the opposite. Let me play the opposite. Here’s Christopher Ruhm, who’s an economist at the University of Virginia.
Christopher Ruhm: What we’ve learned over the last decade or so is an initially surprising fact that when times are bad, people get healthier over many dimensions and one of those appears to be obesity. So that for example, if my income is down, I don’t go out to eat as often, and meals eaten out of the home are probably less healthy and more caloric.
Ryssdal: All right, makes sense on its face but I’m still not convinced.
Dubner: Here’s the thing: Obesity is one of those problems that has a lot of different causes, not all of them obvious. But you were right to focus on the relationship between dollars and calories. That’s incredibly important to consider. I mean, think about this: For the vast majority of human civilization, it was a big struggle to provide enough affordable calories for everyone. But over the past few generations, we’ve gotten very, very good — particularly rich nations like ours — at making calories abundant and delicious and cheap. The markets have given us exactly what we wanted, and now we’re dealing with a side effect.
Ryssdal: Well are you saying then that we should intervene in the markets and make those calories more expensive?
Dubner: Well, I’m not a big intervener kind of guy, but that’s the right question to ask. Let’s go back to your cigarettes that I sent you, and talk about how incentives work. That pack I sent you cost — believe it or not — $12 here in New York, and about half of that was taxes. Now, economists generally agree that cigarette taxes have helped drive down smoking; so if you raise the price of cigarettes a little bit, consumption falls. And that is why, if you want to talk about obesity, some people like the idea of a “fat tax,” which is a tax on fat foods, not fat people, by the way. They’ve tried this in Denmark and Hungary, and there’s some talk of trying it here.
Ryssdal: Yeah, but that’s never going to fly, right?
Dubner: It is a classic regressive tax, it would harder on low-income people than higher-income people, which makes it tough. Another tough sell is to change the food subsidies coming out of Washington. So there’s billions of subsidy dollars that now go to corn, wheat and soy — none of which are bad in and of themselves, but products of those get turned into very, very, very cheap additives in junk food. So one argument is we should shift those subsidies toward fruits and vegetables, so it’s cheaper to eat healthier.
Ryssdal: Which makes sense. So do me a favor next time if you send me something?
Ryssdal: Make it fruits or vegetables or, um, beer would actually be good too. You could send more beer.
Dubner: Light beer.
Ryssdal: No, no, not light beer. But that’s a whole other segment. Stephen Dubner, Freakonomics.com is the website. He’s back in a couple of weeks. See ya.
Dubner: My pleasure, thank you.
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