July 30, 2008

Fast Food Moratorium

It will be interesting to see if Los Angeles's moratorium on new fast food restaurants in South L.A. starts a trend similar to that of the trans-fat ban.  

I'm in favor of the intent behind the ban but I'm more inclined to side with the skeptics on what the outcomes will actually be.  The problems seem more systemic than a simple scarcity of healthy restaurants.  If there truly was a market demand for healthier eating options I'm inclined to think that they would be there, what better incentive is there than open your doors and make a lot of money.  This is from my Bananas reading last night:
. . . . Articles appeared in the press saying how consumers preferred it but consumers took what they got.  Long before their time, Keith and Preston had an instinctive grasp of the forces involved.  The world of business and economics believed, and for many years yet would continue to do so, that consumer demand somehow just arose.  But, wrote Samuel Crowther admiringly, looking back nearly twenty years later on these early days of United Fruit in his book The Romance and Rise of the American Tropics, what was being discovered was that 'demand is a thing which must be created.'
Do fast food restaurants force healthier restaurants out or do they emerge once the healthier options leave?  And what is a healthier restaurant?  The ban defines 'fast food restaurant' as follows: 
any establishment which dispenses food for consumption on or off the premises, and which has the following characteristics: a limited menu, items prepared in advance or prepared or heated quickly, no table orders and food served in disposable wrapping or containers.
But an absence of those characteristics and the presence of waiters certainly doesn't mean eating there is going to improve your health.  I'd be more interested in seeing some initiatives that encouraged people to eat at home, that created real incentives for grocery stores that sold "real" food to move back in, that worked with schools, churches and civic organizations to create a demand for healthier life styles.  And I would throw in some community gardens to boot.  


jennifer said...

It seems to me that cost and convenience are such big parts of the fast food matrix -- the existence of places you can drive through and pick up ready-to-eat food for less than 5 bucks has created a demand for cheap, effort-free food. How do you reconcile a need to eat healthier with the demand to eat for cheap without doing any work to prepare it? I agree with you -- it seems the ban has good intentions, but the problem clearly goes much deeper. Banning new fast food restaurants without attending to the reasons why ff places can afford to produce food so cheaply won't make a big impact, from my perspective.

Pomeroy Kinsey said...

There was a paper I posted on my blog a while back that found very little causal relationship between fast food restaurants and obesity. It used proximity to an interstate to instrument for the consumption. I've seen mixed evidence, though, on this point. Some papers find some relationship, but others don't, and the ones that don't usually seem to be more rigorous and careful. A lot of the economists who study obesity credit rising female labor force participation rates (ie, maternal outside home work rising), the increasing price of time due to rising incomes (it's more expensive, in other words, to take the time to eat well), and other supply-side explanations as the problem with rising obesity. The relative price of eating badly has fallen a lot. That, plus many people are very myopic, and since the health costs of eating poorly are only realized far into the future, the presently discounted costs of bad food are really pretty low (for some people). There's also evidence linking cigarette taxes and smoking bans to higher obesity rates, providing some possible evidence that cigarettes, which reduce appetites, are substitutes for eating.

Richard Posner, interestingly, takes the position that these bans are ultimately good, though. See here for his explanation. He thinks the problem with transfats, and with healthy eating in general, is that the "absorption costs" are too high. That is, the costs of learning that the food is bad for you is prohibitively bad for many people. A classic example of markets failing to provide the optimal amount of healthy food mix would be information asymetries, so maybe he has a point.

That there is a demand for a good doesn't mean that the market will successfully deliver it to market. There is a demand for clean air and clean water, too, but markets consistently fail to create the optimal amount of it. Obesity and bad health are different, because they don't have the same kinds of public good characteristics as environments, but my point is it's probably worth experimenting with these kinds of bans (preferably in more randomized ways) so that we can get a better handle on their efficacy.

Anonymous said...

"demand must be created"--The homesteader on the American prairie or in an isolated rural community in the 19th century was pretty self-sufficent-he and his family had everything they needed.
But when that first Sears & Roebuck catalog arrived a demand was created for a great deal more.
And the US Postal system made acquisition possible.

Also, The availability of cheap fast fried chicken legs certainly prevents me from taking a PB&J to work.

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