Downsizing Soft Drinks

(Photo: Jezz)

In a recent New Yorker column, one of our best economics journalists, James Surowiecki, discusses Mayor Bloomberg’s proposal to ban sales of soft drinks in containers exceeding 16 ounces. Mayor Bloomberg clearly believes, and Surowiecki seems to agree, that people would consume smaller amounts of soft drinks and fewer calories if a ban were enacted.

But would the effect result from behavioral considerations—many people will drink only one serving whether it is 8 oz. or 32 oz.? Or would it result from the second drink costing more time—the effort to get up and order a second 16-oz. drink after buying one—and more money—because the per-ounce price reflects the additional cost of serving two 16-oz. portions instead of one larger portion?  Outside the laboratory, what many argue is evidence for behavioral economics can often be explained by standard neoclassical considerations of money and time costs in demand.

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  1. Gordon Brooks says:

    Let’s not forget incentives other than cost or even time. New Yorkers might buy extra servings just to thumb their noses at Bloomberg’s interference. They might even buy an extra cup to throw in hizoner’s face.

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  2. Dave says:

    It’s not a matter of if it’ll work or not. It’s the principle of freedom. The government is there to protect my rights, not to control my behavior.

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    • Enter your name... says:

      How do you propose the guarantee that you will never end up receiving any government money due disability, poverty, or healthcare?

      It’s all very well to favor freedom, but the rest of us want to make sure that you’re capable of paying for it, and that your “freedom” won’t turn into our kidney dialysis bills.

      If buying an oversized drink meant that you had to pay for private insurance to cover the full costs of your situation in case you ever ended up on disability, Medicaid, or Medicare with any condition associated with obesity, would you buy the insurance and the sugary drink, or would you decide against that oversized drink, now that externalizing the costs of a bad outcome to the taxpayers wasn’t an option?

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      • TexCIS says:

        If you want to reduce costs to government for disability and healthcare, go ahead and outlaw candy, cakes, cupcakes, and cookies. Make most sports illegal: football, soccer, skiing, hang-gliding, and specially swimming in oceans and lakes. Don’t forget motorcycles! Re-institute prohibition on alcohol, and make sure MJ doesn’t get legalized. Outlaw organic foods, because they have a higher incidence of food poisoning from e-coli. Arrest anyone who does stupid stunts for YouTube, to stop copy-cats. Outlaw R-rated violent movies that promote killing. The list is endless.

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      • JAM says:

        A false dilemma is being offer here. You say that it would be OK to down the “Big Gulp” if the health consequence didn’t create an externality for the rest of us to deal with.

        But why does this externality exist in the first place?
        It is because we have created a social safety net that requires us to be responsible for our neighbors health related decisions.
        Once you start taking away individual rights for the good of the whole, there is no limit to what can’t be justified in taking from the individual to benefit society.

        We should place an extremely high burden on any claim that seeks to constrain an individual for the benefit of the whole. Certainly that burden should be far greater than the most marginal cost of the decision over what type of beverage or desert to consume.

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    • JGutacker says:

      It seems like many posters are unfamiliar with the work of psychological & behavioral economics and choice architecture. Many policies and decisions are made by those within the food industry to maximize profits, frequently to the detriment of public health. It is the role of the government to act in the interest of the people (whether or not it fulfills this role and to what effect is variable).
      A world absent the influence of those within the food industry or the government is non-existent.
      Thaler & Sunstein’s work “Nudge” is a great introduction to the world of Choice Architecture and how markets and governments consciously and unconsciously frame daily decisions and shape public life. An interesting read I highly recommend for those who own businesses and seek to enhance their influence on consumer behavior and for those who simply wish to understand and identify the invisible threads that pull us in our daily lives.

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  3. Burt Mustin says:

    Putting a libertarian spin on this, should we be prevented from making decisions that may be harmful if there is no net cost to others? I see others making the anecdotal case that me drinking a 64 ounce Mountain Dew has costs to ‘society’, but I am not convinced.

    Is the cost greater than the 8.25% I paid in sales tax, or the 35% of Federal tax that I paid in federal tax before I could buy the soda? Assume that I am 30 years old and pay for health insurance that I rarely use because I am healthy. If I drink 64-ounce soft-drinks for a few decades, gain a few dozen pounds, have heart problems and incur medical costs, haven’t I already ‘pre-paid’ for those medical costs by paying for insurance for decades?

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      • Burt Mustin says:

        But there is a cumulative effect of drinking Mountain Dew on obesity or health problems, as the first one (or 100) don’t cause any health problems, and therefore any costs. And there is a cumulative benefit (my premiums plus the time value of money) to my health insurer not having to pay out claims for my heart surgery or a stent, because I don’t need it until 30 years from now.

        So what is the cost to ‘society’ of drinking 1 64-ounce Mountain Dew, or 10, or one a day for 30 years? Is it more than the amount I have put back into ‘society’ by making the purchases and not using the health care?

        As an analogy, let’s say I pay for auto insurance for 5 years. Every day in that five years, I go 80 in a 55 mph zone. Assuming that the only damage I can do is hitting a tree or bridge abutment and smashing up my car (and not killing anyone or myself), what is the cost to society if I don’t get into a wreck until the end of the 5th year? Put simply, it is the cost of repairing my car and repairing the tree minus the taxes paid for on the additional gas that I needed to go 80 mph every day and the taxes paid on the profits my auto insurer made off of my 5 accident-free years.

        It would seem that in the macro, anecdotally of course, it is likely that my activities have contributed more than they have cost. Of course they would have contributed even more if I didn’t go 80 mph on that last day and therefore not hit the tree, but I still think I end up on the positive side of the ledger.

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      • Enter your name... says:

        What you describe as the “cumulative benefit” of heart disease appearing in your 50s rather than in your 30s is already reflected in your insurance premiums. Your insurance premiums at age 30 are set at a level that covers only the average healthcare use by 30 year olds with insurance, during the year that they are 30 years old. It does not cover healthcare use by these people 20 years later, even if behavior in the 30 year old is the direct cause of the healthcare problems in the 50 year old.

        The person who receives the “cumulative benefit” of 30 year olds not paying at age 30 for the future health problems that the 30 year old is creating at age 30 is the person who is paying the premium.

        Or, to give a simplified answer: Have you ever noticed how much cheaper healthcare insurance premiums are for 30 year old men than for 50 year old men?

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    • Nick says:

      I would question the economic cost to the public as well, but for different reasons. If you drop dead at 58 because you’ve been drinking Big Gulps every day for 30 years, you’ll have paid into Social Security or Medicare for decades without drawing any benefits.

      And even if you live a healthy lifestyle, your last few years are probably going to be expensive. Whether you’re a morbidly obese, diabetic 60-year old or a 90-year old dealing with issues like Alzheimer’s or a broken pelvis, you’re going to rack up the medical bills.

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    • James says:

      Putting a libertarian backspin on it, though, why does the market prevent me from making my own portion size decisions?

      Beer’s a better example of this than soft drinks (since I drink those only if there’s no alternative). It’s sold almost exclusively in 12 ounce bottles or cans. Now for me, the first sip of a good beer on a hot day is a great thing, but it goes downhill from there, and at about the 8 ounce level, I have to force myself to finish the remainder. So why can’t I buy 8 ounce bottles of beer?

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      • BSK says:

        You can. Spuds, Coronitas, and mini-cans. Search around and you’ll find options. They might bottom out at 10-ounces but wasting/gulping down 2 ounces is better than 4, no?

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  4. Eric M. Jones. says:

    Wouldn’t this work the same if the only legal soft drinks were 256 ounces and nothing smaller was allowed? Free mop with every drink.

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  5. wle says:

    what if i want to save money buying a huge drink then share it?

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  6. jonathan says:

    Dan, are you familiar with Brian Wansink’s work? His lab looks at exactly this kind of thing. The findings are that you will consume what is handy, rather famously even to the extent of eating large amounts of hideously stale popcorn just because it’s presented to you in a large container. Packaging does change behavior; it can induce you to consume more than you would otherwise. (I gather, for example, we can blame the 100 calorie snack packs on him.)

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  7. Pete says:

    I agree it will reduce consumption. I always try to finish my cup to reduce trash bag weight and because I was raised to minimize waste. I’ll refill as necessary to satisfy the desire of the beverage but then there’s almost always a remainder. The smaller the cup, the less I’ll have to finish off.

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  8. Rick says:

    Setting aside the question whether this is the moral or legal right thing to do I think that consumption would be reduced from both behavioral and economic reasons. The economic reasons of cost are fairly straightforward. As support for the behavioral I can only offer some anecdotal evidence.
    I am old enough to remember when coke only came in 7 oz. bottles. That was enough and in my experience people seldom reached for a second one even though there was plenty in fridge or ice chest. As containers became larger (10 oz king size, 12 oz can, 20 oz bottle, etc. ) people would reach for the larger container and finish it.
    Also as fast food restaurants moved their drink dispensers from behind the counter to have customers provide free labor it became very common for me and those I observed to refill or top off their drink after eating and take the replenished drink with them.

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