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 The lost-pleasure analysis, which is criticized by some leading
economists and public health groups, was tucked into new regulations
published last month by the U.S. Food and Drug Administration which
require chain restaurants, grocery store chains selling prepared
food, large vending machine operators, movie theaters and amusement
parks to display calorie counts.
Public health advocates alerted Reuters to the inclusion of the
analysis, which they say makes such regulations more vulnerable to
challenges by industry because it narrows the gap between the
government's projections of a regulation's benefits and costs. Amit
Narang, an attorney at Public Citizen, said the lost pleasure
calculation could help companies or trade groups to challenge the
menu rule in court.
Peter Larkin, chief executive of the National Grocers Association,
warned last week the calorie count regulation would impose "a large
and costly regulatory burden.” Laura Strange, a spokeswoman for the
group, said the grocers would work with supporters in Congress to
change the rule, but declined to say whether they would cite the
lost pleasure factor.
The FDA said the analysis balances the benefits to consumers when
calorie information leads them to eat healthier with the sense of
deprivation people may feel when they give up foods they enjoy. The
new rule takes effect in a year.
"It increases the quality and objectivity of the analysis of
estimated benefits," said FDA spokeswoman Jennifer Corbett Dooren.
The agency does not believe its use has weakened the menu
regulation, since the projected benefits still outweigh the expected
industry costs and any lost pleasure combined, she said. At the low
end of its estimates, FDA projects that the menu rule will bring net
benefits of about 10 cents per person per day.
The FDA did not name or make available the staff economists who
conducted the analysis.
Their work is based on a concept called "consumer surplus" long
employed by economists to calculate benefits people get from various
goods and services which may not be fully captured by market prices.
For example, if a government turned a playground into an industrial
park, or banned pizza, the pleasure people lose from not having the
park or eating a slice counts as a "cost" of the action.
But some leading economists say there is no justification for the
FDA's application of consumer surplus to calorie counts, since the
government is not banning a product but just making information
available.
Consumers who eat healthier as a result "are presumably doing so
because they are now better informed," said Kenneth Warner of the
University of Michigan, one of the nation's leading experts on
cost-benefit analysis. Anything a consumer freely chooses should not
be treated as a forced loss of pleasure, he argued.
According to FDA documents, for the lost-pleasure analysis the
agency relied almost solely on a 2011 paper by then-graduate student
Jason Abaluck. In an interview, he defended the FDA's decision to
reduce its estimate of the health benefits from labeling in part
because "healthier foods are worse off on other dimensions such as
taste, price, and convenience."
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A revised version of the paper will be submitted to a peer-reviewed
journal soon, said Abaluck, who now teaches at the Yale University
School of Management.
BROWNIE OR APPLE?
In May, Reuters reported that the FDA had applied the lost-pleasure
factor when analyzing its proposed rules on electronic cigarettes.
Agency economists said factoring in the sense of deprivation smokers
would suffer reduced the benefits of tighter regulation by 70
percent.
In a public comment on the proposed rule sent in August, nine
leading economists including Jonathan Gruber of MIT and Thomas
Schelling of the University of Maryland, said there was no economic
basis for using consumer surplus in that case, partly because
smoking is addictive rather than voluntary.
In its analysis of calorie counts on menus, the FDA projected that
the rule would lead to fewer cases of obesity, Type-2 diabetes and
heart disease, fewer medical costs to treat those diseases, and less
suffering as a result of developing those conditions. It estimates
the total economic value of those benefits at $5.3 billion to $15.8
billion over 20 years. The range reflects the uncertainty in how
much calorie counts on menus will change people's behavior.
The agency also put a dollar value on the lost enjoyment consumers
might feel if the calorie figures made them avoid certain foods,
such as an 800-calorie brownie, in favor of, say, a 100-calorie
apple. The calculation does not include any gain in immediate
pleasure if the consumer enjoys the apple more than the brownie or
feels virtuous for healthier eating.
The agency's economists estimated the lost pleasure at $2.2 billion
to $5.27 billion over 20 years. That range reflects the imprecise
science of assigning dollar values to lost enjoyment, they
explained. They then subtracted those sums from the rule's estimated
benefits, cutting them significantly.
(Reporting by Sharon Begley; Editing by Michele Gershberg and Martin
Howell)
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