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Friday, July 18, 2014

True Cost of a Burger by Mark Bittman in NYT

NYT food writer Mark Bittman tries his hand at economics in The True Cost of a Burger in a recent NYT, which I just noticed today (dated July 15, 2014).  He has been working on it for a year, and wrote it with the help of an intern.
He starts off as follows:
"In 2005, the House of Representatives passed an act that forbade consumers to sue fast-food operators over weight gain."
I'll suspend judgment on his economics for now, but it looks like he's got a problem with civics.  An "Act" is legislation that has been enACTed -- i.e., a bill that has passed the House, the Senate, and been signed by the President.  The House "passes" stupid bills all the time for symbolic reasons, knowing full well they have no chance of success in the Senate.  Anyway, the "Cheeseburger" bill was not enacted, and thus is not an "act."

{Update:  having now read the whole article, I can say that his grasp of economics is awful.  See below}
The point of the article is to add up the "external costs" of cheeseburgers, and add them to the price of the cheeseburger, to arrive at a "true cost."  In his view,  "cheeseburgers are the coal of the food world, with externalities in spades."  I don't know enough about the coal industry or the rest of the food industry to judge this statement on any level, so I won't.

His conclusion is that given the "average" cost of a burger of $4.49, the easily-calculable external costs range from 68 cents to $2.90 per burger.)
He mentions and in some cases quantifies the following:
Litter -- the social cost of cheeseburger wrappers that are not put in the trash. 
Carbon generation -- According to those who know (see “Meat Eater’s Guide” (2011)), the carbon footprint of beef cattle is 27 pounds of CO2 equivalent produced per pound of beef, but when you subtract the savings used by adding ground-up dairy cows into your cheeseburgers, it's down to 25 pounds of CO2 emissions.  Cheese produces 13.5 pounds of CO2 equivalent per pound; he notes but does not quantify the carbon footprint of bread. Estimated cost:  53 cents per burger, based on an average of three competing monetary valuations of greenhouse gas pollution (ranging from $37 per metric ton [the government's official rate, which works out to 15 cents per burger] to an estimate that's almost 10 times as great.

Obviously, when two estimates are off by a factor of ten that means that someone is very wrong, but Bittman can be forgiven for reporting them all and then just averaging.  I'm a big believer in requiring producers to bear the costs of the externalities that they cause, but the problem is in quantifying those externalities.  It sounds like the carbon footprint externalities here are at least 15 cents per burger, so that's a start.  But this is the only place where Bittman's analysis of externalities makes any sense.
Chronic disease costs: 
-- He acknowledges evidence that red meat may increase risk of cardiovascular disease, but because the evidence is not certain, he leaves that cost out.
-- He states that "a main factor in the rise of obesity has been an increase in the availability of calorie-dense foods, and burgers played a big role in this process."  This sounds logical, but when he tries to quantify it, his point loses all logical force.

Here's the process:

--  "Between 1970 and 2000, per capita calorie intake increased by 24 percent . . . ."

-- During the same period, "the 'food-away-from-home sector' grew to nearly half of all food we eat."

-- Restaurants, of course, are the source of most burger consumption.

I suppose this is true, based of the amounts of hamburger buns and meat available at every supermarket, it's a fair bet that a lot of people make them at home, too.  What's interesting is that in the end, his analysis of health-related externalities is limited to externalities caused by fast food burgers, when those same externalities are caused by home-cooked burgers as well.  
-- "Between 2007 and 2010, 11.3 percent of adult Americans’ daily caloric intake came from fast food."

It's not clear how this squares with the apparent fact that half of the food we eat is from the "food away from home sector."  If he's only focusing on fast food, why did he give us the other statistic?

-- "Correlation is not causation, of course, and it seems likely that foods high in sugar and other hyperprocessed carbohydrates are most responsible for high obesity rates, but burgers certainly played a role in rising caloric intake."

The last two bullet points are successive sentences in the article.  I still don't get it.  All we know from the first sentence is that 11.3 percent of caloric intake during a particular 3 or 4 year period came from fast food.  It's hard to relate this to anything else we know.  It's also hard to understand how it relates to his earlier statistic that nearly half of our food intake is from the "food away from home sector," by which I guess he means restaurants (not clear where e.g. workplace cafeterias fall into this; but his stat that 11.3 percent of our calories come from fast food suggest that fast food is only 11.3/50 of our away-from-home food intake).  And there's an acknowledgment that the main cause of obesity is probably something other than burgers (sugar and hyperprocessed carbs).  But hold on, there's more:
"To estimate the share of obesity-related costs resulting from burger consumption, we estimated the share of calories coming from burgers in fast-food restaurants, where the majority are eaten."  

I have to do this one sentence at a time; here I think he is saying we will determine what percent of fast-food restaurant calories come from burgers, and that this will somehow help us understand the overall share of obesity costs attributable to burgers. 

"Assuming that the 11.3 percent of calories is proportional to the incidence rate of obesity (it may be higher), its associated health risks, and its treatment costs, up to 15 percent of fast food’s share of direct and indirect costs arising from obesity (about 1.65 percent of the whole) are attributable to burgers."

Here's where he simply loses me.  The reported 11.3 percent of calories is just our daily percentage of fast-food intake (in calories).  Why should that necessarily be proportional to the incidence rate of obesity?  I guess he is saying that our overall food intake is responsible for our obesity.  But by saying that, isn't he giving away the whole game?  Doesn't this mean that because 88.7 percent of our calories come from non-fast food, we can look at each of those items and determine their contribution to obesity?  Or put another way, if bread is 20% of our diet and carrots are 1% of our diet, doesn't his logic lead to the conclusion that blame bread for something like $50 billion in diet-related health care costs, and carrots for something like $2 billion?  He seems to have calculated that about 1.65% of our total calories come from fast-food burgers, and from this he is saying that fast-food burgers are to blame for 1.65% of obesity's costs.  You could isolate any other part of our diet -- e.g., as above, bread or carrots -- and come up with a similar, or much larger, percentage.  

"The link between obesity and a handful of deadly chronic diseases — arthritis, cardiovascular disease, hypertension, Type 2 diabetes and some cancers, among others — is well documented, as is their enormous economic burden. Direct medical diet-related costs are currently pegged at about $231 billion annually." 

I have to keep quoting, just to be fair; I don't want anyone to think I'm mischaracterizing.  The bizarre thing is that by not making any attempt to distinguish between kinds of foods, he is almost certainly UNDERESTIMATING the effect of burgers, without realizing it.  But I say that just because I happen to believe that there is a causative correlation between excessive burger intake and obesity.  His data does nothing to prove this.

Of course, it's possible to read the data and say we all know that burgers are worse for you than other constituents of your diet.  But we will be generous and treat them as being no more or less linked to diet-related health care costs than any other food item, and that's how we know our numbers are conservative.  But that doesn't seem to be what he is saying.  And the bottom line is that if some Americans are eating too much food, that doesn't mean that each particular food item (which doubtless are eaten by many thin and healthy people as well) should bear some amount of the externalities caused by that.  One needs to figure out WHY those particular Americans are eating so much, and deal with the problem there. 
"These numbers above would mean that this cost of burgers is about $4 billion per year (from fast food burgers only!), which averages out to 48 cents per burger. (Some put these costs five or six times as high, and there are indirect costs as well; again, we’re being conservative.) And between 2010 and 2030, the combined costs arising directly from diseases related to obesity could increase by an additional $52 to $71 billion each year. This could double the cost per burger in additional health costs alone."

Again, what's missing from this article is any evidence that burgers contribute to obesity more than other foods in our diet.   It's intuitive, but the data and analysis presented here almost point the other way.
Other "vaguely calculable" non-zero costs:

-- cost of dealing with "elevated nitrates in water supplies resulting from the chemical fertilizers used to grow corn to feed cattle" [true, but to be fair one would have to compare this sort of thing with pollution etc caused by other production of other foods]

-- "cost of food stamps and other public welfare programs made necessary in part by the ultralow wages paid at most fast-food operations" 

This one seems crazy and reveals an uninformed liberal agenda (again, I'm not particular conservative or liberal -- I just have trouble with uninformed partisan agendas).  It's equally possible (and maybe even more plausible) that the availability of these "ultralow"-wage jobs reduces the overall need for foodstamps, and that the availability of inexpensive fast food saves money for poor people.]

-- "the beef industry’s role in increasing antibiotic resistance, which costs, according to the Centers for Disease Control and Prevention, something like $55 billion a year; some measure of E. coli illnesses; and land erosion, pesticide residues, direct corn subsidies, injury rates at slaughterhouses, and so on."  

I absolutely agree that this is a problem.  But this is where he should have real statistics.  Otherwise, there's just no way to say that burgers are any worse than bread.  And to all this I would add the simple moral cruelty of raising animals for food; although of course that doesn't apply just to beef.

"Even more difficult to calculate":

-- "the 'cost' of a shortened life"

-- "the value of loss of biodiversity that results from the destruction of rain forests to provide land for cattle or their feed."

-- "an emerging body of research linking decreased male sperm quality to mothers’ beef consumption."

He concludes with more numbers that don't seem to add up:

"Last year, burger chains grossed about $70 billion in sales. So it’s not a stretch to say that the external costs of burgers may be as high as, or even outweigh, the “benefits” (if indeed there are any other than profits)."

A minute ago he said that he was conservatively estimating the externalities due to burgers at $4 billion (48 cents per burger) for health care, plus 53 cents per burger (say another $4 billion) for carbon.  So that's about $8 billion in external costs.  Note that he could do a similar calculation for all the non-burger fast food that is sold -- by his reasoning, if fast food burgers make up only 15% of 11.3% of our calories, then 85% of our fast food calories -- or 9.6% of our total calories, create another health-care related externality that dwarfs that caused by the burgers (i.e. over $20 billion).  So that means the $70 billion business is causing about $30 billion harm, by his reasoning. 

Economically speaking, it's also annoying that he only concludes that the costs "may" outweigh the benefits (to which he snarkily adds, "if indeed there are any other than profits").  The word "may" renders the statement completely meaningless.  And the lack of any actual attempt to quantify the benefits (and only a very poor attempt to quantify the externalities) makes this a very sloppy statement.  The benefits may well include the availability of jobs for unskilled labor, the availability of cheap and convenient food, the added productivity that comes as a result of access to cheap and convenient food, etc.  Fast food, eaten in moderation, may well be a very good thing for those who eat it that way.

 If those externalities were borne by their producers rather than by consumers and society at large, the industry would be a highly unprofitable, even silly one. It would either cease to exist or be forced to raise its prices significantly.  

By his own statistics, maybe 68 cents per $4.49 burger, which doesn't seem like all that much.  But as above, he'd have to do a lot more to prove that fast food is a "silly" business.   And of course, if you make them internalize their externalities, you'd have to do the same to all their competitors (grocery food, restaurant food, etc), so "fast food" might still remain comparatively cheaper.

And now for the grand sum-up:

"In this discussion, the cheeseburger is simply a symbol of a food system gone awry. Industrial food has manipulated cheap prices for excess profit at excess cost to everyone; low prices do not indicate “savings” or true inexpensiveness but deception. And all the products of industrial food consumption have externalities that would be lessened by a system that makes as its primary goal the links among nutrition, fairness and sustainability."

Perhaps this is his admission that, using his methods, we could use bread as an even more compelling symbol.  Sadly, I actually agree with the overriding sentiment of this sentence.  The problem is that his data and methodology do nothing to support his conclusion. 

To summarize my view: there's no question that our diet contributes to health problems, and mere diet-related health care dollar costs vastly underestimate the cost of this problem -- it's not just the dollars that we pay for treatment when our diet makes us sick, it's also all the lost productivity and unhappiness that comes from being sick in the first place.  And intuitively burgers could be part of the problem.  But as he acknowledges, all the studies on the harms due to red meat are speculative, and the same could be said for fat generally.  And of course, different people are affected differently by different types of food.  

There's no question that the carbon footprint caused by raising beef is an externality that should be internalized somehow.  But I feel that way about almost all externalities.

And this is a horribly misguided way of placing blame for obesity on one particular food.  A much better way to do that is by studying obese people (especially obese people with health problems) and figuring out what is causing their obesity from there. 

Since we're talking about fast food, I'm going to make one point, that is related only to the question of "benefits" of fast food, above.  In all my years of eating fast food, I don't recall EVER having gotten sick as a result of doing so.  On the other hand, I get sick an appreciable number of times after eating at mid-to-high priced restaurants.  Maybe around 10% of the time.  And sometimes very sick -- bad colds, or food poisoning.  I think the reason is that the fast food is processed, and the workers don't contact it nearly as much.  And for many restaurants, workers are reluctant to call in sick and show up for work sick.  This, plus their closer contact to the food -- which is fresher, but also more liable to spoil or have contaminants in it already -- puts customers at far greater risk than fast food.

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