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Tuesday, April 27, 2010

Defining Sin

Followers of my blog with recognize that I'm a fan of some sin taxes (smoking is a no-brainer example), but enacting this dynamic pigovian taxes do have downsides. The biggest downside is, how do we define "sin?"

If I sneak over to your house while you are at work, shoot your dog in the face, and leave it on your porch for you to find when you get home, that is "sin" by most all accounts.

If I put a little extra salt on my french fries and eat it or serve it to others, is that sin? If it is sin, what does that sin cost? Surely if I know salt will kill myself or others in the future, and I knowing feed it to myself, then I am acting in a sado-masochistic fashion - I'm slowly killing myself or others, and damn it feels (tastes) so good.

But, do we know salt will cause harm to us in the future? If so, how much?

People can point to statistics and say salt is a factor in high blood pressure and heart disease. Others may point to statistics showing that, globally, that is not always the case. In the case of salt, many of the producers of salt-laden product have come to an agreement to voluntarily reduce their usage of salt in their products. In many ways, this is a much more palatable way of reducing 'sin' when compared to a forced taxation. But, I've come to learn that large corporations usually don't do something on purpose to hurt their bottom line - so one has to wonder if this is a temporary PR move that can enable companies to get on-board the 'health' train. I hope it isn't - if not it's a huge plus for Bloomberg and I give him kudos for getting around having to tax the salt out of peoples' mouths.

12 comments:

Amit said...

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Anonymous said...

Who says government doesn't impose moral judgments! Especially if government can tax it and promote it and subsidize it all at the same time.

Danny L. McDaniel
Lafayette, Indiana

Daniel MacDonald said...

Interesting post!

I think you hit the nail on the head when you asked how much the salt costs in terms of negative externalities. As I'm sure you're aware, Mankiw LOVES Pigovian taxes because, unlike other price interventions by the government (say the minimum wage), Pigovian taxes actually move us CLOSER to the social optimum level of (P,Q).

The policy prescription depends crucially on the ability to accurately calculate the total amount of externality (positive or negative) and then enact the appropriate per-Q (subsidy or tax).

So in addition to the "what defines sin?" idea (a REALLY great point!) you might also talk about how health interests are swayed by corporations and how THESE affect government information about externalities.

A more fundamental critique, which judging from your first paragraph is something to which you are not sympathetic, is the question, can you place a value on a human life or body part? The theory and practice of Pigovian taxes rests crucially on the ability to do so, but I would assert that there are other methods of devising policy than by trying to assign a dollar value that will be a good proxy for a negative externality. (cont'd next comment)

Daniel MacDonald said...

(cont'd)

This is near and dear to my own work on labor law. Worker's compensation has very specific dollar values for various body parts that may be harmed/lost on the job. Is this the best way of reforming job conditions? What kind of distortionary incentives does it provide the employer?

Just some more food for thought on the very-controversial subject of Pigovian taxes and negative externalities!

Garth said...

Danny... I completely agree with you. Pigovian taxation is completely dependent on the validity of our information and our assumptions regarding social cost and benefit. Though, you mention there might be other policies that might be more/just as effective and less distortionary....care to share?

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