Hostname: page-component-848d4c4894-mwx4w Total loading time: 0 Render date: 2024-07-03T12:25:58.942Z Has data issue: false hasContentIssue false
  • English
  • Français

Lunch with Pigou: Externalities and the “Hidden” Cost of Food

Published online by Cambridge University Press:  15 September 2016

Jayson L. Lusk
Jayson L. Lusk*
Affiliation:
Department of Agricultural Economics at Oklahoma State University and the Samuel Roberts Noble Distinguished Fellow at the Oklahoma Council of Public Affairs
*
Correspondence: Jayson Lusk ▪ Department of Agricultural Economics ▪ 411 Ag Hall ▪ Stillwater, OK 74078 ▪ Phone 405.744.7465 ▪ Emailjayson.lusk@okstate.edu.
Get access

Abstract

Social critics have taken aim at modern production agriculture using a common theme: many food, health, and environmental problems are explained by corporate farms, agribusinesses, and fast-food restaurants failing to account for the full costs of their actions. How accurate is this diagnosis? How feasible is the assumption that these externalities are most effectively mitigated via Pigovian taxes and subsidies? Drawing on my experiences at a National Institute of Medicine meeting on the subject, I seek to clarify the definition and nature of externalities and discuss situations in which public policy is most and least effective in efficiently making “hidden” costs of food visible.

Keywords

agricultural policyexternalityfood policyfood prices
Type
Contributed Papers
Information
Agricultural and Resource Economics Review , Volume 42 , Issue 3 , December 2013 , pp. 419 - 435
Copyright
Copyright © 2013 Northeastern Agricultural and Resource Economics Association 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Acemoglu, D., and Robinson, J.A. 2013. “Economics versus Politics: Pitfalls of Policy Advice.” Journal of Economic Perspectives 27(2): 173–192.Google Scholar
Barnett, A.H., and Yandle, B. 2009. “The End of the Externality Revolution.” Social Philosophy and Policy 26(2): 130–150.Google Scholar
Baumol, W.J. 1972. “On Taxation and the Control of Externalities.” American Economic Review 62(3): 307–322.Google Scholar
Bhattacharya, J., and Bundorf, M.K. 2009. “The Incidence of the Healthcare Costs of Obesity.” Journal of Health Economics 28(3): 649–658.Google Scholar
Bhattacharya, J. and Sood, N. 2011. “Who Pays for Obesity?” Journal of Economic Perspectives 22(1): 139–158.Google Scholar
Bittman, M. 2011. “Don't End Agricultural Subsidies, Fix Them.” New York Times, 2 March (http://opinionator.blogs.nytimes.com/2011/03/01/dont-end-agricultural-subsidiesfix-them/?_r=0).Google Scholar
Bovenberg, A.L., and Goulder, L.H. 1996. “Optimal Environmental Taxation in the Presence of Other Taxes: General-Equilibrium Analyses.” American Economic Review 86(4): 985–1000.Google Scholar
Brunello, G., Michaud, P.C., and Sanz-de-Galdeano, A. 2009. “The Rise of Obesity in Europe: An Economic Perspective.” Economic Policy 24(59): 551–596.Google Scholar
Buchanan, J.M. 1969. “External Diseconomies, Corrective Taxes and Market Structure.” American Economic Review 59(1): 174–177.Google Scholar
Buchanan, J.M., and Stubblebine, W.C. 1962. “Externality.” Economica 29: 371–384.Google Scholar
Caro, R.A. 2003. Master of the Senate: The Years of Lyndon Johnson. New York, NY: Vintage Books.Google Scholar
Cawley, J. 2004. “The Impact of Obesity on Wages.” Journal of Human Resources 39(2): 451–474.Google Scholar
Coase, R.H. 1960. “The Problem of Social Cost.” Journal of Law and Economics. 3(1): 1–44.Google Scholar
Coase, R.H. 1974. “The Market for Goods and the Market for Ideas.” American Economic Review 64(2): 384–391.Google Scholar
Coase, R.H. 1988. The Firm, the Market, and the Law. Chicago: University of Chicago Press.Google Scholar
Flegal, K.M., Kit, B.K., Orpana, H., and Graubard, B.I. 2013. “Association of All-Cause Mortality with Overweight and Obesity Using Standard Body Mass Index Categories: A Systematic Review and Meta-analysis.” Journal of the American Medical Association 309(1): 71–82.Google Scholar
Friedman, M., and Friedman, R. 1980. Free to Choose: A Personal Statement. New York: Harcourt.Google Scholar
Hayek, F.A. 1945. “The Use of Knowledge in Society.” American Economic Review 35(4): 519–530.Google Scholar
Holcombe, R.G., and Sobel, R.S. 2001. “Public Policy toward Pecuniary Externalities.” Public Finance Review 29(4): 304–325.Google Scholar
Institute of Medicine (IOM) and National Research Council (NRC). 2012. Exploring Health and Environmental Costs of Food: Workshop Summary. Washington, DC: The National Academies Press.Google Scholar
Kling, A. 2007. “So You Want to Be a Masonomist.” Ideasinactiontv.com. Available at www.ideasinactiontv.com/tcs_daily/2007/10/so-you-want-to-be-a-masonomist.html (accessed October 30, 2013).Google Scholar
Knight, F.H. 1924. “Some Fallacies in the Interpretation of Social Costs.” Quarterly Journal of Economics 38(4): 582–606.Google Scholar
Lakdawalla, D., Philipson, T., and Bhattacharya, J. 2005. “Welfare-enhancing Technological Change and the Growth of Obesity.” American Economic Review 95(2): 253–257.Google Scholar
Lusk, J.L. 2013. The Food Police: A Well-Fed Manifesto about the Politics of Your Plate. New York: Crown Forum.Google Scholar
Lusk, J.L. Forthcoming. “Are Sugar-Sweetened Beverage Taxes a Cost-Effective Means of Reducing Weight?” Canadian Journal of Diabetes.Google Scholar
Mankiw, G. 2006. Principles of Economics (4th edition). Boston: South-Western College Publishing. Google Scholar
Mises, L. 1935. “Economic Calculation in the Socialist Commonwealth.” Hayek, F.A., ed. Collectivist Economic Planning. London: George Routledge & Sons.Google Scholar
Mishan, E.J. 1971. “The Postwar Literature on Externalities: An Interpretative Essay.” Journal of Economic Literature 9(1): 1–28.Google Scholar
Morey, E. 2004. “Ax Murdering and Wash Your Hands after Using the Toilet: A Contrite/Confused Economist.” Working paper, Department of Economics, University of Colorado (www.colorado.edu/economics/morey/papers/axmurdering.pdf).Google Scholar
Nelson, W., and Lappé, A. 2012. “Why We Must Occupy Our Food Supply.” The Huffington Post, 24 February. Available at www.huffingtonpost.com/willie-nelson/occupy-food_b_1299401.html.Google Scholar
Pauly, M.V., and Herring, B. 2007. “Risk Pooling and Regulation: Policy and Reality in Today's Individual Health Insurance Market.” Health Affairs 26(3): 770–779.Google Scholar
Pigou, A.C. 1920. The Economics of Welfare. Library of Economics and Liberty, www.econlib.org/library/NPDBooks/Pigou/pgEW.html. Originally published by Macmillan and Co., London.Google Scholar
Pollan, M. 2006. The Omnivore's Dilemma: A Natural History of Four Meals. New York: The Penguin Press.Google Scholar
Steier, G. 2011. “Externalities in Industrial Food Production: The Costs of Profit.” Dartmouth Law Journal 9(3): 163–197.Google Scholar
Tweeten, L. 2010. “Is There a High Cost of ‘Cheap Food’ Policies?” Working paper, Department of Agricultural, Environmental, and Development Economics, Ohio State University.Google Scholar
Viscusi, W.K., and Aldy, J.E. 2003. “The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World.” Journal of Risk and Uncertainty 27(1): 5–76.Google Scholar