Will the idea of a soda tax ever go away? It’s unlikely.

On June 4, Harvard University economist Greg Mankiw had this piece in the New York Times, in which he expressed skepticism about a soda tax. His reasoning is that it is possible that soda taxes could save us from our bad habits, but do we really trust the government to do this? His answer seems clearly to be No:

If this is indeed the best argument for “sin” taxes, as I believe it is, we are led to vexing questions of political philosophy: To what extent should we use the power of the state to protect us from ourselves? If we go down that route, where do we stop?
Taxing soda may encourage better nutrition and benefit our future selves. But so could taxing candy, ice cream and fried foods. Subsidizing broccoli, gym memberships and dental floss comes next. Taxing mindless television shows and subsidizing serious literature cannot be far behind.
Even as adults, we sometimes wish for parents to be looking over our shoulders and guiding us to the right decisions. The question is, do you trust the government enough to appoint it your guardian?

David Leonhardt disagrees. The soda tax is a swell idea, he thinks, because soda drinkers impose a large cost on society:

The link between sugary drinks and obesity is stronger than the link between any other kind of food and obesity, as Kelly Brownell, the Yale obesity researcher says. Calorie intake from these drinks — most of which have no nutritional benefit — has increased almost threefold since the late 1970s. The increase accounts for about half the total per-capita rise in calorie consumption over the same period.

Obesity, Leonhardt argues, is very costly to society ($1,250 per household, mostly in taxes and insurance premiums); hence the need for a tax, on the grounds of budgetary externalities.

Mankiw responds with evidence that this argument isn’t consistent with the data:

A reader alerts me to this study, which concludes: “Although effective obesity prevention leads to a decrease in costs of obesity-related diseases, this decrease is offset by cost increases due to diseases unrelated to obesity in life-years gained. Obesity prevention may be an important and cost-effective way of improving public health, but it is not a cure for increasing health expenditures.”
Add savings on pension costs such as Social Security into the mix and the argument against obesity-related budgetary externalities seems even stronger. Tim Worstall reaches a similar conclusion. Note also that the impact of obesity on the cost of insurance may not be an externality: Some work suggests that the obese bear that cost themselves in the form of lower wages.

This is great information. My position on the soda tax is here. I am against it.