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Relative Price of Foodstuffs

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"Relative Price of Foodstuffs"

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The obvious interest group lobbying aside, a lot of skepticism about a soda tax is going to be driven by generalized anti-paternalism. But the majority of Americans clearly don’t have a universal anti-paternalist viewpoint—you don’t see mass movements to repeal seatbelt regulations, to let heroin be sold at 7-11, or to eliminate safety regulations on canned beans. This group will probably be interested in David Leonhardt’s chart showing the large drop in the real price of soda since 1978:

0519-biz-LEONHARDT 1

People tend not to be aware of these relative price shifts unless the change is really enormous—think of the fantastic decline in the cost of computing power during this time period—because small declines in real prices register as increases in nominal prices so all people know is that “a dollar doesn’t go as far as it used to.” However, anything whose nominal price increases by a lower-than-average amount is in fact getting cheaper, irrespective of the nominal price trend.

For related reading, my health care colleagues recently put together an informative report on what the Affordable Care Act does to confront childhood obesity.

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