On the day of the return of the McRibb (or in early November for non-McDonalds aficionados) the San Francisco Board of supervisors passed an ordinance outlawing the sale of toys in meals that did not meet certain nutritional guidelines. It effectively bans the Happy Meal. It was passed with a veto proof majority and will take effect this December.
This bill literally and figuratively hit close to home for me. True, McDonalds is far from fine dining but my parents were not bad people for letting me eat chicken McNuggets and I was not a brainwashed victim of false advertising. Ten years after I had my last happy meal, I am now a health conscious vegetarian and I still take considerable issue with the implications of this bill. As Voltaire was famously misquoted, “I may disagree with what you eat, but I will defend to the death your right to eat it.”
Let’s first consider the economic implications of this ordinance. It does not take an economist to see that the reduction in supply does not eradicate demand. Anyone with a superficial knowledge of the prohibition can tell you that. So where does this demand go? To answer my economic questions I got the chance to interview Professor David Johnson, the beloved if not slightly unstable, head section leader of Economics 10.
On the issue of demand, Johnson remarked, “Suffice it to say that leaving the TOY out of the Happy Meal could incentivize parents to placate their screaming, tantrum-throwing youngsters by throwing in a cone or an apple pie to compensate for the lost toy!” So ultimately the demand does not change but must be compensated elsewhere.
Perhaps, defenders of the ordinance might say with the recent passing of Obamacare the American taxpayer is liable for the health choices of others. Subsequently, the demand might fall slightly given the ban and this is a step in the right direction. Perhaps, but it’s also two steps back. Given administrative costs of the ban as well as the dead weight loss in sales, I asked Johnson if it’s fair to say the costs of the ban would outweigh the reduction of the costs of the externality (the price of healthcare for the obese). He responded, “Certainly seems like it might, given that I’m not sure much externality costs will be saved by this policy at all.” So administrative costs and loss of sales will outweigh the reduction in healthcare costs and the reduction in healthcare costs is unlikely or minimal.
Why is this ban likely to be ineffectual in ‘fighting’ obesity? The ban attacks the supply of Happy Meals not the demand. The intuition is obvious; you can ban the sale of Happy Meals but you can’t ban the wanting of a Happy Meal. Yet it is precisely the wanting, or the demand, that is the source of the problem. Just because it’s easier to ban the supply rather than the demand does not justify the ban. Like it or not, the demand increases the supply, and then the rates of obesity raise universal healthcare costs. The demand will be satisfied regardless as long as there is still a demand.
Any feasible reduction in the demand must arise organically (pun intended). Children must choose to go for the veggies if we are to expect a sustainable solution to the healthcare problem. It is not the prerogative of the government to dictate what we eat, but it certainly may help inform the public. Granted, the burden of education lies predominantly with the parents of children, but the government can provide information or promote healthy lifestyle choices as Michelle Obama has been doing.
This ordinance, however, is a Band-Aid to a hemorrhage. Instead of addressing the source of the harm, it applies a superficial block. So why did it pass? Politics as usual. Johnson theorizes, “As I suspect, this vote is more politics than economics (the Mayor promised a veto even though the bill passed with veto override power). The long term effects would be minimal.” Yet Johnson is perhaps more optimistic than I am. He sees in this debate, the opportunity for discussion. “Do I think this policy is a bit “wacked”? Yes… Banning toys in Happy Meals will not solve the health care problem in America. But, then again, agreeing to cut $40 billion in spending from this year’s federal budget won’t solve America’s debt problem either, but both have potential to at least encourage more serious discussions.”