Obesity and Negative Externalities of Consumption: Denmark’s Policy of a ‘fat Tax’

Introduction

According to me one of today’s most outstanding, yet somewhat overlooked, health crisis facing society has to be that of obesity. I find that the issue of obesity contrives a profound world-wide impact and I am convinced that if abrupt measures are not implemented as soon as possible then this epidemic will undoubtedly spiral out of control on a global scale.

Of course dissecting and finding a solution to such a demanding dilemma, like that of obesity, is most certainly not a simple task yet in my opinion more action can absolutely be further implemented in order to help put a stop to this scourge. Just to emphasize the degree to which this dilemma has become a rapidly growing ultimatum, the World Health Organization (WHO) claims: “in 1995, there were an estimated 200 million obese adults worldwide and another 18 million under-five children classified as overweight. As of 2000, the number of obese adults has increased to over 300 million”

More extensive research proposes that “between 1975 to 2014, the number of people classed as obese rose from 105 million to 641 million,” and recent reports predict by 2025 a fifth of the world’s population will be obese. Astonishingly, this indicates that even in the space of a meagre 5 years rates of obesity have snowballed drastically and are continuing to do so, suggesting that no real substantial intervention has been enacted in order to bring a halt to this proliferating pandemic.

This disease that is obesity constitutes a paramount risk towards an array of potentially fatal diseases, ranging from: “diabetes mellitus, cardiovascular disease, hypertension and stroke, and certain forms of cancer. ” Here is a list of the most obese countries showing even the USA has made it into the top 20:I endeavour to explore this issue as a world studies, using biology to analyse the health detriments caused by obesity and consumption of fatty foods whilst also implementing economics to evaluate the effectiveness of a ‘fat tax’ in tackling this problem.

To narrow the scope of this assignment I will specifically be looking at how Denmark initially attempted to enforce a policy of a ‘fat tax’ as a means of preventing obesity and reducing the negative externalities associated with the consumption of fatty foods. Furthermore, I will examine what lead to Denmark later scrapping this policy and why it ultimately failed. I will incorporate the usage of various distinct sources of secondary data such as online articles, reports and even textbooks and overall I hope to potentially justify why government schemes alone, are potentially not enough to conquer this rising epidemic.

Biological effects of Obesity on the body

Obesity is caused by a combination of factors but is usually resultant of the daily consumption of large quantities of fats and sugars. Lack of exercise and physical activity, also play a role. The NHS recommends, on average, 2,500 calories a day for men and 2000 calories for women in order for a healthy weight to be sustained. The NHS claims that “eating a large takeaway hamburger, fries and a milkshake can total 1,500 calories” making falling in excess of these dietary parameters frankly quite easy. This gives light as to why the Denmark government officials deemed it necessary to target fatty foods in particular with a tax, in order to quell their high levels of obesity. How do we know fats are so detrimental for our health?

There are various pieces of evidence suggesting a high-fat diet endorses the development of obesity as well as direct correlations between the amount of dietary fat and the degree of obesity. In addition to this, the prominence of this relationship has been demonstrated through comprehensive research detailing how black prepubescent females, allegedly consume more calories as fat than white females. Further research went on to reveal that, interestingly enough, black adult females are heavier and have higher cardiovascular disease mortality rates than white females whilst a culmination of studies conducted on animals outlined the way in which high-fat diets instigate greater food intake and weight gain than in comparison to high-carbohydrate diets The role of dietary fat in obesity. Contrary to popular belief, not all fat is bad for you. In fact, the body needs some fat for various different reasons.

First of all, It's a vital source of energy and it also contributes to the absorbance of vitamins/minerals. Besides that, fat is required in order to construct and assemble cell membranes and the sheaths encompassing nerves. They are also important for blood clotting, muscle movement, and inflammation. On one hand, there are the good fats (monounsaturated and polyunsaturated fats) whilst on the other end of the spectrum there are the bad ones (industrial-made trans fats). Saturated fats are said to be somewhere in the middle. On top of this, all fats have identical chemical structures with analogous features: a chain of carbon atoms bonded to hydrogen atoms. What distinguishes different fats is the length and shape of the carbon chain as well as the ratio of hydrogens to carbons. These, succinct contrasts in composition establish fats with different forms and functions. It is universally accepted that the most dangerous fat is trans fat which is generated by the process of hydrogenation.

The process essentially makes healthy vegetable oils more like “not-so-healthy” saturated fats. Trans fats were often found primarily in solid margarines and vegetable shortening however, in today’s modern society, these detrimental substances crop up in almost all food commodities “from commercial cookies and pastries to fast-food French fries. ” The issue at hand arises from the fact that foods rich in trans fats have been proven to increase levels of harmful LDL cholesterol and diminish amounts of beneficial HDL cholesterol inside you. Trans fats have also been attested to prompting inflammation, which is notably linked to heart disease, stroke, diabetes etc. They also pose as a factor in contributing to insulin resistance associated with an increase in the risk of developing type 2 diabetes. Studies claim that “even small amounts of trans fats can harm health: for every 2% of calories from trans fat consumed daily, the risk of heart disease rises by 23%. ”

The worst part of this whole conundrum is that trans fats appear to have no known benefits to an individuals health and no safe level of consumption Dangers of high levels of certain cholesterol. As I briefly mentioned above, an individual’s prospects of suffering from an array of various cardiovascular diseases may drastically be elevated as a result of excessive levels of certain cholesterol, leading to fatal diseases such as heart disease and stroke. The reason for this is due to the fact this type of cholesterol is notorious for leading to the formation of fatty deposits referred to asplaques which accumulate inside the walls of your blood vessels. Prolonged trauma from this occurrence will inevitably culminate in one’s arteries becoming alarmingly constricted, impeding the circulation of blood towards vital organs - namely the heart.

Bad cholesterol vs good cholesterol

Different types of cholesterol bare a distinct composition of fat and protein which they’re transported by within your body. These amalgamations of fat and protein are commonly referred to as lipoproteins. The cholesterol frequently responsible for the infirmities associated with obesity (often referred to as ‘bad’ cholesterol) is called low-density lipoprotein (LDL). The role of this particular arrangement of lipoprotein is to dispatch cholesterol from your liver to each of the cells within the body where cholesterol is needed.

However, if levels of LDL within your blood exceed the amount of that which is required then this can lead to the emergence of fatty deposits within your arteries. On the other end of the spectrum we have High-density lipoprotein (HDL) which aids in cleansing the body of surplus levels of cholesterol, achieved by carrying cholesterol from your bodily tissues to your liver. The cholesterol is then broken down by the liver and expelled out of the body.

Due to the fact that HDL has this practical ability to prevent cholesterol from dangerously accumulating inside your blood vessels to lethal quantities, your risks of heart disease and stroke are somewhat alleviated. For this reason we refer to HDL as ‘good’ cholesterol This suggests to me that, evidently, not all fats are damaging towards one’s health and thus perhaps not all fatty foods should be targeted with a tax. Economic Impact: A big part of my intentions with this essay, was to look at how this worsening issue of obesity could be tackled by implementing economic strategies.

The economic approach I am referring to in particular is the introduction of a tax on fatty foods (fat tax). To demonstrate the prospective effectiveness of such a policy, I will be narrowing the focus of this proposal onto a particular nation: Denmark. Danish National Health and Medicines Authorities claimed that “47 percent of Danes are overweight and 13 percent are obese” More recent polls have divulged how the situation has eminently retrogressed with contemporary figures indicating “more than half the Danish population is now overweight. ” Sundhedsstyrelsen (the Danish health and medicines authority) maintains that towards the culmination of 2017approximately “51 percent of Danes were slightly to seriously overweight” Denmark endeavoured to undertake a quantum leap in rectifying this predicament after appearing to be allegedly the first nation to initiate a fat tax in October 2011.

The tax was administered unto targeted goods such as: “butter, milk, cheese, pizza, meat, oil and processed food if the item contains more than 2. 3% saturated fat. ”Danish administrators and representative officials aspired that this scheme would aid in fettering the public’s consumption of fatty foods Nonetheless, the Danish Tax Ministry disclosed in November 2012, that it would repeal the fat tax, attesting to the fact that it was found deficient and unsuccessful in changing the consumption patterns of the Danish population. It seemingly prompted the undesired outcome of cross border trading, as well as create instability with regards to employment by placing several Danish jobs under serious jeopardy Ultimately, the enactment of this gambit was chronicled as “a bureaucratic nightmare for producers and outletsLooking at this in terms of economics, this crisis is merely an exposition of market failure.

Market failure is a concept that refers to the market economy failing to successfully bring about allocative efficiency, ensuing in an over-allocation of resources or an under-allocation of resources respective of the social optimum (this is the desired and most favourable provision of resources within society, considering all external costs and benefits whilst not excluding internal costs and benefits). Fundamentally speaking, when market failure transpires there is essentially an over-provision or under provision of output where in which too much or too little of goods are produced and consumed from the slant of what is socially most advantageous.

Overtime, this can eventually lead to the contingency of negative or positive externalities of consumption or production. Intrinsically speaking, an externality is a repercussion that befalls when the activities or exploits of consumers or producers prompts negative or positive side-effects (or spillover) on other members of society not involved in the undertakings of these actions, and whose stakes and wellbeing are not contemplated. These people are often referred to as ‘third parties’. If benefits are implicated in the spillovers unto third parties then these are positive externalities, yet if the spillovers entail costs then these are negative externalities. Each of these can arise from either consumption activities or production activities.