This article in medicalnewstoday.com believes that the solution is to subsidize the construction of "safe" places to exercise. According to Coase, we could subsidize the amount of the marginal benefit to shift the quantity of places to exercise from its less-than-equilibrium position. However, we already spend billions of dollars annually to handle the excess demand on our healthcare system. You could also use Coase's work to argue that a certain amount of property rights should be assigned (in this case, amount of government-funded healthcare) and require those who use more to pay for the increase in social marginal cost. Either way, someone is going to have to internalize the cost and the more the government has to, the more the Republicans are going to dig in their heels.
Seeing as the market is where we reveal our true preferences, as a classmate put it years ago, "time to break out the Wii [in lieu of the Xbox he would discuss at length]" or maybe a treadmill. The more realistic way to get people to change is to make them economically responsible for their flab. Make being fat more expensive.
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Interestingly enough, Denmark just passed a fat tax last Saturday in an effort to cut the country back on its fat consumption. Although this fat tax is not the same one that Montie is alluding to—which would actually apply to the human body—it is in the same vein in that it would monetarily penalize unhealthy eating habits.
As Montie pointed out, a Cosian solution could be reached if property rights were assigned to the amount of government-funded healthcare. Additionally, a note should be made that with any sort of fat tax, there will also be a negative externality imposed on businesses that make their profit on less-than-healthy things. The article estimated that the first year of the new tax will end up costing Danish businesses around $28 million. Coase suggests that government intervention can be dicey, “direct governmental regulation will not necessarily give better results than leaving the problem to the market.” Government, in other words, may not provide the most efficient solution. However, time will tell what the actual costs of the tax end up being; the economist would hope that this problem is great enough that the costs imposed on businesses and consumers by the government will be less than the social marginal benefit to minimize dead weight loss to society.
Link to the article: http://www.washingtonpost.com/business/denmark-introduces-fat-tax-to-curb-unhealthy-habits-improve-life-expectancy/2011/10/02/gIQA1WjfFL_story.html (Unable to hyperlink)
Perhaps a fat tax isn't the best economic solution for our high health care costs. We should look at the big picture and examine the food politics of this nation and the specific industries that the government subsidizes. By providing industrial agriculture subsidies the government makes it cheaper to eat the kinds of foods that could be made from corn and soy: mainly processed foods, sweetened beverages and feedlot meat. These subsidies make it cheaper for food industries to produce "junk food" which then gives consumers an incentive to purchase these foods over healthier options. But although cheap food is good politics there are significant costs to public health and the public purse. It seems like the government is inefficiently allocating public resources by spending for cross purpose: junk food and health care.
The reason I think that my teacher was correct in recommending a fat tax is that subsidies (to people producing healthier foods) are not very popular. I do agree that this tax would be mostly a burden on the poor and that is a problem that I haven't resolved in my head yet. I want eating healthy to cost as much as eating unhealthily. This is actually really important to me as a family member had multiple bypass surgeries funded by the government despite his refusal to change his diet. I think that you can force feed people like him information but at some point he needs to be financially accountable for the burden he placed on the government.
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