Introduction
Obesity is a serious problem that affects both developed and developing countries. The increasing consumption of processed foods that contain high amounts of sugar and unhealthy sources of calories affects the ways in which populations maintain their weight (Malhotra, Noakes & Phinney 2015). Furthermore, the competitive nature of food production and sales industries has led to many major companies accepting a standard of offering larger-sized products at relatively small prices (Marteau et al. 2015). As a result, the combination of business strategies and a lack of governmental regulations, the third of all people in multiple nations are now overweight or obese (Shittleworth 2015). Obesity leads to many health problems, increasing the risk of heart disease, stroke, diabetes, and other harmful conditions (Shittleworth 2015). This report aims to analyze two policy interventions – downsizing and taxation – to compare their cost and effectiveness and choose one of them for implementation in New Zealand.
Background
New Zealand is a country located on two islands in the Pacific Ocean. It is considered one of the most advanced non-European countries in the world, with high rankings in economic quality, governance, education, healthcare, security, and other characteristics (Legatum Institute 2018). In 2015, New Zealand ranked behind the United States and Mexico as a state with the largest rate of obesity in its population (Shittleworth 2015). Currently, according to the official statistics, one in three adults in the country is obese, and one in eight children between two and fourteen years is overweight (New Zealand Ministry of Health 2018). The problem of excessive weight also disproportionately affects native populations, with more than 60 percent of all Pacific adults being obese (New Zealand Ministry of Health 2018). Such a high number of people with health problems indicates an issue that requires immediate global intervention.
Introduction of Options
Taxation
The first intervention suggests that all products that contain artificial sweeteners, high sugar amounts, and ’empty calories, should be burdened by an excise tax that increases the price of such goods. As Gortmaker et al. (2015) note, this programme may deter customers from purchasing large quantities of unhealthy products and choosing other options instead. A so-called ‘junk food tax’ is a measure that alters the way people perceive products when entering a store or a restaurant. Moreover, an excise tax would be applied not on people during each purchase but on manufacturers of these foods. One of the expected outcomes is the decrease in people’s desire to purchase such products and manufacturers’ revaluation of ingredients, production, and pricing strategies.
Downsizing
Another approach also targets ‘junk food’ and products with high amounts of sugar and salt by lowering standard portion limits and establishing minimum prices for larger options. This intervention has multiple levels, but all strategies lead to the reduction of portion sizes. Marteau et al. (2015) argue that by modifying portion sizes and discouraging marketing that focuses on offers of larger quantities for smaller prices, the government can change the way people consume unhealthy foods. People may be discouraged to buy larger options, thus consuming less energy-dense products in one sitting. Furthermore, restrictions on advertising and product placement in stores can reform individuals’ tastes by altering available visual cues.
Requirements
Cost
As mentioned above, New Zealand is a developed country with a high quality of life. The country’s stability is highly dependent on international trade due to the territory’s removed location and climate (Kelsey 2015). New Zealand has strong economic relations with Australia, the US, and countries of the European Union. Nonetheless, the country is also a center of tourism and entertainment, providing a variety of services to residents and international visitors (Kelsey 2015). Thus, while its manufacturing opportunities may be limited, its service industry is robust, providing some security to support the introduced health interventions.
Effectiveness
The latest statistics on obesity in New Zealand show that the country is in a health-related crisis. From 2006 to 2018, the rate of adults with excessive weight has increased from 27 to 32 percent (New Zealand Ministry of Health 2018). Among children, this number grew as well, and the official data indicates that the situation does not improve. The impact of obesity caused by consumption of energy-dense foods with high sugar and salt levels is serious since weight gain from these causes may put people at risk of other conditions and further endanger the health of the entire community. According to Shittleworth (2015), the lack of regulation of fast food and other unhealthy products leads to customers making purchase decisions that have a long-term impact on their well-being.
Comparison
Cost
Taxation
The costs of introducing an excise tax into the food industry may depend on the reaction of the manufacturers and sellers. Governments earn revenue from taxes, and this intervention can help New Zealand’s government to obtain additional funds for the healthcare sector. As Cobiac et al. (2017) find, the introduction of a food tax can lead to a small increase in prices for consumers, but this change is almost unnoticeable (less than one percent difference). In contrast, scholars estimate that such taxes can lead to a rise in net-cost savings up to $2 billion (Cobiac et al. 2017). Moreover, people may save additional money on healthcare services due to changes in dietary preferences. Thus, it is possible to conclude that the cost of taxation depends not on the introduction of the intervention but on possible pushback.
Downsizing
As an intervention, downsizing is focused on introducing different standards for manufacturers and sellers of foods. Thus, the development of the new guidelines and their enforcement are the main expenditures that the government will encounter. Similar to the first option, the pushback of food distributors and residents is at the center of financial concerns. However, in this case, the government will not receive any revenue as a direct result of the program, thus meaning that the option is less financially stable.
Effectiveness
Taxation
The impact of excise taxes on the population greatly depends on the presentation and reception of the new policy. First of all, it should be regarded that taxes are often viewed negatively by people regardless of their purpose or amount (Petrescu et al. 2016). Nevertheless, if New Zealand will present the benefits of taxation to its residents, they are more likely to respond to the intervention with approval. Programs that allow people limited choice are more effective than those that rely on individual decisions because they provide a state-wide solution, assuming that they do not infringe on people’s freedoms (Adams et al. 2016). The effectiveness of taxation can be reviewed on an example by Cobiac et al. (2017) who find that taxes can change people’s diets and reduce health-related expenditures.
Downsizing
This approach combines the government’s intervention and people’s individual choices by modifying but not removing different portion sizes. According to Petrescu et al. (2016), such ‘nudging’ initiatives are not perceived as negatively as other options, thus causing decreased pushback and general acceptance of new policies. Malhotra, Noakes, and Phinney (2015) find that the reduction of carbohydrate intake is not of the most effective ways to maintain a good metabolism and avoid excessive weight gain. Marteau et al. (2015) argue that downsizing is linked to people’s consumer choices since some people cannot adequately access the harm of larger portion sizes. Thus, the positive impact of this intervention is supported by evidence from behavioral science.
Conclusion
New Zealand’s obesity rates continue to rise and require immediate action.
Both taxation and downsizing are not costly in terms of implementation.
The two interventions may receive significant pushback from residents and companies if presented incorrectly.
Taxation is viewed negatively more often than downsizing.
Both interventions have a positive impact on people’s health and medical expenses.
The programs target people’s purchasing decisions and put restrictions on the food industry.
Recommendation
With regards to the costs and effectiveness of the discussed interventions, downsizing is to be recommended for the government of New Zealand. Although taxation is an option with financial benefits, societal pushback may interfere with the success of this initiative. Both interventions lead to a positive change in people’s consumer choices, but downsizing does not put an explicit restriction on products by raising prices, thus offering people some affordable choices. It is possible to follow the recommended intervention with other initiatives once it is accepted by society.
References
Adams, J, Mytton, O, White, M & Monsivais, P 2016, ‘Why are some population interventions for diet and obesity more equitable and effective than others? The role of individual agency’, PLoS Medicine, vol. 13, no. 4, p. e1001990.
Cobiac, LJ, Tam, K, Veerman, L & Blakely, T 2017, ‘Taxes and subsidies for improving diet and population health in Australia: a cost-effectiveness modelling study, PLoS Medicine, vol. 14, no. 2, p. e1002232.
Gortmaker, SL, Long, MW, Resch, SC, Ward, ZJ, Cradock, AL, Barrett, JL, Wright, DR, Sonneville, KR, Giles, CM, Carter, RC & Moodie, ML 2015, ‘Cost effectiveness of childhood obesity interventions: evidence and methods for CHOICES’, American Journal of Preventive Medicine, vol. 49, no. 1, pp. 102-111.
Kelsey, J 2015, Reclaiming the future: New Zealand and the global economy, 2nd edn, Bridget Williams Books, Wellington.
Legatum Institute 2018, New Zealand (ranked 2nd) – Legatum Prosperity Index 2018, Web.
Malhotra, A, Noakes, T & Phinney, S 2015, ‘It is time to bust the myth of physical inactivity and obesity: you cannot outrun a bad diet’, British Journal of Sports Medicine, vol. 49, no. 15, pp. 967-968.
Marteau, TM, Hollands, GJ, Shemilt, I & Jebb, SA 2015, ‘Downsizing: policy options to reduce portion sizes to help tackle obesity’, BMJ, vol. 351, p. h5863.
New Zealand Ministry of Health 2018,Obesity statistics, Web.
Petrescu, DC, Hollands, GJ, Couturier, DL, Ng, YL & Marteau, TM 2016, ‘Public acceptability in the UK and USA of nudging to reduce obesity: the example of reducing sugar-sweetened beverages consumption’, PLoS One, vol. 11, no. 6, p. e0155995.
Shittleworth, K 2015, ‘New Zealand battles obesity epidemic as third fattest country in the world’, The Guardian, Web.