New York Post: NYC pol pushes to extend sugary-drink warnings at local chains

Article published: 13 September,  2022

IB Economics syllabus: Microeconomics (market failure, negative consumption externality, demerit good)

Provision of information

This is a great article that shows taxes are not the only policy governments can use to limit the consumption of demerit goods. Many people are unaware how much sugar they consume when they, for example, drink a “grande Mocha Frappuccino at Starbucks” which itself contains more sugar than the “recommended daily dose of 50g”. The council of New York City plans to fight against asymmetric information with sugar-content warnings that will be mandatory to use next to items that contain unhealthy levels of sugar.

Negative externality of consumption

Note that obesity, diabetes and tooth decay on the one hand represent internal costs (they are negatively affecting consumers). However, on the other hand, they have external costs, such as the costs of healthcare provided using taxpayer dollars to people suffering from the consequences of consuming too much sugar or the decreased productivity of the workforce, just to name two. A good key concept here could be choice, efficiency or intervention.

Source of image: Getty Images/iStockphoto

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