Coffee, exercise and music.
MaryJane said:
Question: Do you think fast food companies should be held liable for obesity? (I admit this is for an assessment and I want your opinions).
Heres some economics perspective
http://www.blackwell-synergy.com/doi/abs/10.1111/j.0002-9092.2005.00697.x
Also:
The Biasing Health Halos of Fast-Food Restaurant Health Claims: Lower Calorie Estimates and Higher Side-Dish Consumption Intentions, Journal of Consumer Research, October 2007, v. 34, iss. 3, pp. 301-14
The McDonald's Equilibrium: Advertising, Empty Calories, and the Endogenous Determination of Dietary Preferences, Social Choice and Welfare, December 2004, v. 23, iss. 3, pp. 383-413 Which can be found here:
http://www.springerlink.com.simsrad.net.ocs.mq.edu.au/content/46rxhh5u8mygg1rd/fulltext.pdf
Obesity and Nutrient Consumption: A Rational Addiction? Richards, Timothy J.; Patterson, Paul M.; Tegene, Abebayehu; Contemporary Economic Policy, July 2007, v. 25, iss. 3, pp. 309-24
Heres my very rough economics story
The Market: People who want fast food (consumers) and those who are willing to sell it (Maccas).
Consumer is constrained by income, resource, time and information constraints.
Maccas however, has information about food that deters consumers (nutrition etc.)
Therefore imperfect/asymmetric information.
i.e. Consumer wants Big Mac but really doesnt want a big Mac if he knew it was a fat bomb and artery clogger, consumer gets fat because he doesnt know and Maccas knows this and get away with it.
Result: inefficient and non-utility maximising/rational consumer decision caused by asymmetric information
Rectification: Government intervention to shift risk and liability so as to promote utility maximising/rational decision.
How: Change the rules and penalties and make Maccas give information (e.g. nutrition and health risks), adjust penalty for noncompliance so it acts as an incentive for maccas to give as much information as it is economically feasible for them to signal (e.g. post up nutrition charts and effective warnings)
New result: Consumer knows he is eating a fat bomb and cant complain if he is getting fat obese because he made a rational economic decision given the income, time, resource and information avalible.
Morale of the story: Govt intervene in market for a more efficient outcome and when this outcome is achieved, no liability exists.
If u want more about information asymmetry (and application in other areas of choice), check up Market for Lemons by George Akerlof (he won a "Nobel Prize" in economics for this) as well as works by George Stigler and other Chicago School Economists.
