CONTROLLING THE ENVIRONMENTAL COSTS OF OBESITY.

• Author: Mann, Roberta F.
• Position: Twenty-First Century Food Law: What's on Our Plates?

Obesity is increasingly viewed as a major health problem across the world. Obesity presents both external and internal costs. Obesity alone may be responsible for some $2 trillion in medical costs and lost productivity, representing significant external costs. Internal costs occur because people make eating and drinking choices without being aware of the eventual damage to their health. Obesity also carries environmental costs. Consumption of certain energy-dense foods made from com and soy (including meat) increases soil erosion and water pollution from fertilizer use. Governmental policy encourages the production of such crops. Being overweight decreases physical activity and personal mobility, leading to increased use of motor vehicles. Environmental factors such as sprawl and transportation policy affect obesity rates. When people cannot walk or take public transportation to work, they spend more time in their cars. They have less time to exercise and prepare healthy meals. Hence, both obesity's effect on the environment and the environment's effect on obesity lead to increased carbon emissions and exacerbate climate change. Taxes can potentially control both the external and internal costs of obesity. By increasing the cost of certain foods, taxes can discourage their consumption. A number of national and subnational jurisdictions have enacted such taxes, including Denmark, Finland, France, Mexico, the Navajo Nation, and the city of Berkeley, California in the United States.

This Article will examine a variety of economic instruments for controlling obesity, including regulation, taxes, and nudges. The relative success of governmental measures to reduce tobacco use are also examined to see what lessons might be learned. Finally, the Article will explore existing U.S. tax provisions to consider how modification of such provisions might help with the problem of obesity.

1. INTRODUCTION 696 II. DEFINING OBESITY 699 III. EXTERNAL AND INTERNAL COSTS OF OBESITY 701 A. Environmental Costs 701 1. Environmental Causes of Obesity 701 2. Obesity-Related Environmental Costs 703 3. Societal Costs of Obesity 706 IV. ASSESSING APPROACHES TO CONTROLLING OBESITY 707 A. Reforming Subsidies 707 B. Regulatory Approaches 712 C. Nudges 714 D. Incentives and Taxes 717 1. Incentives 717 2. Taxes 718 V. GLOBAL TRENDS IN FOOD TAXATION 720 VI. ANALOGIES 726 VII. FREEDOM OF CHOICE, INEQUALITY, AND REGRESSIVITY 730 VIII. CONSIDERING INCOME TAX SOLUTIONS 731 A. Existing and Modifiable Provisions 731 1. Medical Expense Deduction 731 2. Employee Fringe Benefits 732 3. Mortgage Interest Deduction 733 B. Models for Targeted Provisions: Denying or Limiting Deductions 734 C. Tax Credits for Healthy Foods 735 IX. CONCLUSIONS AND RECOMMENDATIONS 738 "I used to worry 'bout rich and skinny, 'til I wound up poor and fat." (1) I. INTRODUCTION

   Obesity is increasingly viewed as a major health problem across the world. Globally, 13% of adults suffered from obesity in 2014. (2) Obesity leads to adverse health outcomes such as heart disease, stroke, and diabetes--shortening life and reducing the quality of life. (3) Obesity presents both external and internal costs. Some estimate that obesity alone may be responsible for almost three million deaths per year and some $2 trillion in medical costs and lost productivity, representing significant external costs. (4) Internal costs occur because people make eating and drinking choices without being aware of the eventual damage to their health. (5)

   Although less frequently studied, obesity also carries environmental costs. Consumption of certain energy-dense foods made from corn and soy (including meat) increases soil erosion and water pollution from fertilizer use. (6) Governmental policy encourages the production of such crops. (7) Being overweight decreases physical activity and personal mobility, leading to increased use of motor vehicles. (8) Airlines have even recognized the increase in the average weight of passengers and the need to use more fuel to carry that heavier load. (9)

   Environmental factors such as sprawl and transportation policy affect obesity rates. (10) When people cannot walk or take public transportation to work, they spend more time in their cars. (11) They have less time to exercise and prepare healthy meals. (12) They are more likely to visit fast food restaurants and eat in their cars. (13) Hence, both obesity's effect on the environment and the environment's effect on obesity lead to increased carbon emissions and exacerbate climate change. (14)

   Taxes can potentially control both the external and internal costs of obesity. (15) By increasing the cost of certain foods, taxes can discourage their consumption. (16) A number of national and subnational jurisdictions have enacted such taxes, including Denmark; Finland; France; Hungary; Mexico; the Navajo Nation; and U.S. cities such as Philadelphia, Pennsylvania; Boulder, Colorado; and Albany, Berkeley, and San Francisco, California. (17)

   This Article will examine a variety of economic instruments for controlling obesity, including regulation, taxes, and nudges. The relative success of governmental measures to reduce tobacco use are also examined to see what lessons might be learned. The Article will begin with a definition of obesity, followed by a discussion of the external and internal costs of obesity, focusing on environmental issues. Next, the Article will consider the pros and cons of different approaches to controlling obesity, examining current trends in food taxation. Finally, the Article will explore existing U.S. tax provisions to consider how modification of such provisions might help with the problem of obesity. For example, advertising deductions could be denied to producers of energy-dense, nutrient-poor foods that are designed to be hyper-palatable and addictive.

2. DEFINING OBESITY

   What is obesity, and why is it a global problem? Obesity can be defined as "excessive fat accumulation that may impair health." (18) The World Health Organization (WHO) recognizes body mass index (BMI) as a simple way to define whether a person is overweight or obese. (19) A person with a BMI greater than or equal to twenty-five is considered overweight; a person with a BMI greater than or equal to thirty is considered obese. (20) The United States Department of Agriculture (USDA) noted that more than two-thirds of American adults and nearly one-third of American children are classified as overweight or obese. (21)

   Weight gain occurs when a person ingests more calories than she expends in activity. (22) All foods have caloric content, but some foods appear to have a stronger link to obesity. Researchers found that increased consumption of added sugars, in particular, have been linked to increased body weight. (23) Another study found that increased consumption of sugary drinks significantly contributed to increasing obesity levels. (24) Liquid calories do not satisfy hunger as effectively as solid calories, so overconsumption is more likely. (25) In fact, it may surprise some readers just how much sugar beverages can contain. A twenty-ounce Mountain Dew (26) soda contains seventy-seven grams of sugar, as compared to a Cinnabon (27) cinnamon roll, which contains fifty-five grams of sugar. (28) USDA's dietary guidelines recommend consuming less than 10% of daily calories from added sugar. (29) However, added sugars currently constitute more than 13% of the average American's caloric intake, with beverages accounting for 47% of added sugars. (30)

   Obesity rates have increased rapidly in recent years, not just in the United States, but also around the world. (31) Worldwide obesity has more than doubled since 1980. (32) In 1960, the average weight of an American woman in her twenties was 128 pounds. (33) In 2012, the Centers for Disease Control and Prevention (CDC) reported that the average American woman weighed 166 pounds, the same as an average American man in 1960. (34) CDC also reports race and gender disparities. Black women have an average BMI of 32.0, as compared to white women with an average BMI of 28.2 and Hispanic women with an average BMI of 29.5. (35) Men have generally lower average BMI figures than women, although black and Hispanic men are slightly higher than white men, with an average BMI of 28.9, as compared to an average BMI of 28.7. (36)

   Obesity causes serious health problems. The National Institutes of Health (NIH) describe the health risks of obesity as including coronary heart disease, hypertension, stroke, diabetes, cancer, and osteoarthritis. (37) Heart disease, cancer, stroke, and diabetes are among the top ten leading causes of death. (38) Life expectancy in the United States decreased between 2014 and 2015, for the first time since 1993. (39) While average life expectancies decreased overall, the change is not evenly distributed among income groups. (40) Upper income individuals, in both the United States and worldwide, have significantly longer life expectancies than those in lower income groups. (41) Lower income groups are also more likely to be obese, with people living in the poorest counties in the United States showing the highest obesity rates. (42)

   While correlation does not prove causation, blacks and Hispanics have a higher poverty rate than whites or Asians. (43) U.S. Census data from 2007-2011 shows that 11.6% of whites have incomes below the poverty level, as compared to 25.8% of blacks and 23.2% of Hispanics. (44) According to 2013 USDA data, 83% of American households receiving supplemental nutrition assistance program (SNAP) benefits live in poverty, and 43% of those households have gross income at half or less of the poverty level. (45) While both SNAP and non-SNAP households have soda in their top-ten food expenditures, soda is ranked second in terms of expenditures for SNAP households and fifth for non-SNAP households. (46) Non-SNAP household expenditures on both vegetables and...