Tuesday, March 22, 2011

Are Fast Food Items a Market Failure?

As I write this I notice that I have once again chosen a bad (for by health) meal for lunch today. Being that I "know" I wanted to eat healthier, it is hard to explain my choice for the convenience of TacoTime over the more difficult process of thinking about how to get a healthier meal [demonstrated preferences]. This must mean one of two things is going on:

In the first case, I could be a victim of perverse incentives. Perhaps it is the market's fault that my particular preferences are not available in the market. I would like either something that is salad based or something that is bean based that I could get at the drive-thru window of a restaurant. Maybe we, as a fast-food eating nation, are just stuck in bad habits.

The second case, I could simply be confused about my preferences. I didn't even look on the menu to see if there were bean based options on the menu. It is a "Mexican" place after-all. [I just checked, they have veggie and bean burritos, BTW]. What sells, after all, is not the most healthy food option.

Neither of these satisfies my conflicted desires. I think to myself there should be more healthy options when I need a fast food lunch. Menus need more options and maybe I would find something that I both like and is good for me. I would still need it to be prepared quickly and packaged conveniently. It would be so much better if I could change everyone else's preferences to suit my vision of myself as a better person.

One such plan is to tax foods that make people obese. The idea is that these foods, because they are both cheap and delightful are over-consumed. Americans are certainly fatter, but are they happier? The claim is that they are happy in the moment but are not correctly accounting for the cost later on. Fatty foods and lots of meat is unhealthy. Besides this, the social cost of obesity raises the cost to provide universal health care. This social cost seems to dictate that something be done [assuming we hold the provision of universal care constant].

What would a world look like with a fast-food tax? Well, maybe McDonald's would have a new menu that complied with a heath food, fast food regulation. This would force the company to invest in packaging that could keep fruits and vegetables fresh and appetizing. Perhaps if beans and lettuce were not taxed like hamburgers and tacos, it would be easier for these restaurants to achieve scale in the more healthy items, which would help with the diversity of options and the packaging choices.

But I think instead this type of fast food would lose business, and the consumer would lose a very quick meal option. I just don't buy it that people will make special plans to go and eat salad at their local McDonalds. Perhaps fast-food should go out of style. But I tell you, as I write this, I am appreciative of not having to make my own meal for lunch so that I could have time to think about the economic implication of that meal instead.

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