If you’ve paid close attention in Econ 101, you may have noticed that economists mention two socially beneficial reasons for taxes- to collect money to pay for public goods and to internalize negative externalities. Sometimes, if we’re feeling frisky, we even talk about taxes in the context of income redistribution, but that is a normative grey area that we aren’t so comfortable with.
You may have also noticed that a ban is, in a way, an extreme form of a tax. Granted, a ban isn’t going to do much to raise money to pay for public goods, but they go a long way in curbing the production and consumption of goods that have large negative externalities. That said, I would like to understand how the proposed ban on sugary drinks in Boston government buildings fits into this framework:
To review, an externality is an effect of a market on a third party that is neither a producer nor a consumer in a market. Therefore, the fact that soda makes people who drink it fat is not in itself an externality and is instead just a cost of consuming that people can take into account when deciding whether or not to buy that next Coke. Consumers of soda can decide how much to consume, so the health effects are their issue. I, on the other hand, can’t control how much soda others drink, so when the soda drinkers start imposing costs on me that I can’t control, we get externalities. The fact that the health care system is set up such that healthy people subsidize unhealthy people could mean that drinking excessive amounts of soda could cause eventual externalities, but the evidence here is far from clear. (Even if a clear link between excessive soda consumption and societal costs were to be established, it would only justify restricting excessive consumption. Logistically speaking, this is a difficult policy to implement.)
Taxing goods which produce negative side effects (at a rate commensurate with the size of the side effect) can be socially beneficial because it stifles the production and consumption of those units of the good where the value to the producers and consumers doesn’t outweigh the costs to the rest of society. Call me crazy, but I somehow doubt that the cost to society outweighs the benefits received by the producer and consumer of that first bottle of soda sold on city property, so it’s seems instead that the city of Boston is reading the Marge Simpson playbook from the time she tried to get sugar outlawed in Springfield:
“I guess you just can’t use the law to nag.” Well, at least Marge Simpson has come to terms with that. The point is that the only way this ban can be perceived as socially beneficial is if the benefits of sugary drinks to those who drink them and those who produce them are heavily discounted, and since when have we decided that such pleasures are not worth counting? Thanks, city of Boston, but I already have one mom, and I don’t need another. Especially since she lets me drink soda.
(For those of you who want to play devil’s advocate, I would be more supportive of a private workplace banning soda- I would still point out that it wasn’t a helpful policy, but private employers don’t have the same social duties as the government, which is explicitly supposed to function on behalf of its constituents. On that note, I guess I would also be less cranky if the city acknowledged that it was nagging and didn’t imply that it was in some way doing people a favor. You could also argue that this is more of a nudge than a ban, since people can still bring outside beverages into the buildings, but it’s at least worth noting that the ban increases people’s level of inconvenience.)