Wednesday, September 27, 2006

Trans Fat Tradeable Permits

As I was planning to spend the day in New York today, I was pleased to read that "the New York City Board of Health plans to prohibit the city's 20,000 restaurants from serving food that contains more than a minute amount of artificial trans fats." Outstanding, New York City must have solved all of its big problems, since it has now decided to focus on this one.

What can I say? I'm an economist, and I'm here to help. Imposing a quantity restriction on trans fats does not accommodate different costs of trans fat abatement across cuisines. Taking the trans fats out of french fries may disproportionately reduce their taste or increase their costs. Instead, why not grant all restaurants an allotment of permits to cook with trans fats and allow them to buy and sell extra permits as the menu demands? As with other pollutants, tradeable permits allow the trans fat reductions to occur where the relative costs of doing so are lowest.

Economics in action -- working alongside the nanny state to keep you healthy.

11 comments:

Chip said...

Wonderful post. Economists blessed with good, dry wit are rare. I hope your post makes it farther up the media chain and, if it does, that you'll choose to expand on various options for exchanging the credits.

crocop said...

It seems to me that the thinking beyond such a system assumes that the unpriced cost of consuming a marginal unit of hydrogenated oil is equal across food groups. For example, even though the oil that goes into the french fries at McDonald's and the oil for upscale restaurants probably costs the same in the marketplace, the cost of getting rid of that oil is probably much larger than it is for an upscale restaurant, whose consumers are much more health-conscious.

As much as I dislike trans fats, I'm not sure there is room for effective public policy for regulating them.

Kenji said...

A good try, but all of the shortcomings of use of permits in other areas (e.g., air pollution) apply here equally. On what basis do you decide how many permits to issue, and how do you reduce the total production of transfat?

Andrew Samwick said...

The city is imposing a quota on trans fats--allowing restaurants to sell the room under their quota requires no additional information. Restaurants use the same methods of reducing trans fat usage as they would under the quota, only now, they can use the most efficient methods to a greater extent, because low-cost users reduce more.

Noah said...

Interesting approach but how would you publicly regulate trans fats? I don't see how it could be done...

Crocop said...

Looking back at my original comment, I realize that I wasn't very clear.

My point is that all trans fats are not created equal. One gram of the stuff at Burger King does not represent nearly the same negative externality as that same gram at, say, Arezzo.

This is not--I repeat, NOT--analagous to a carbon tax or gasoline tax. In those instances, one unit of emissions from one power plant or gas station is essentially equivalent as far as externalities are concerned.

I suppose the effect, then, would be to punish the fast-food joints disproportionately. Of course, some might argue that bashing such plebian chains is in society's best interest.

Even if one buys the paternalistic argument, however, there are much more elegant policies for correcting the negative externalities associated with fast-food places than this.

Elsa said...

Interesting idea. While I support efforts to reduce restaurants' use of trans fats (my father's a cardiologist), the extent to which restricting restaurants' use of trans fats will result in their selling healthier foods is unclear. The restaurants in question may very well substitute other unhealthy fats (palm kernel oil, anyone?) for trans fats, the result being that the regulation would substantially increase costs for the restaurants without causing the desired increase in healthiness of the food. I think that if they want this regulation to be effective, they should restrict fats that are nearly as harmful as transfats as well. In order for this process to be efficient, however, I'd think they would need to consider options like the idea you've just proposed.

Anonymous said...

What about a fat tax with the idea that consumers pay the true cost of the good to society. The proceeds from the fat tax could go directly to the health care budget (of course I live in Canada where the government pays most of the health care bills). The basic idea is that we internalize the external health care costs to the consumer and all that cheap junk food will then start to reflect it's true cost. The added bonus would be that food businesses would have an incentive to make modifications to their foods - if they could do so by maintaining food taste - and avoid the higher prices.

Anonymous said...

Low Fat Donuts discovered
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sold on the web at
www.holeydonuts.net





Low Fat Donuts discovered
Holey Donuts!(tm) Ultra Low Fat Gourmet Donuts
New York, NY -- October 27, 2006 – The low-fat donut has been the Holy Grail of the food industry. Food companies have been able to take most of the fat out of everything from cheese to Twinkies, but no one has succeeded in designing a marketable donut that dips below 4 grams of fat per serving before now.
Holey Donuts!™ announces a major innovation in the donut industry with the introduction of Ultra Low Fat Gourmet Donuts. Holey Donuts! has a unique patent pending process that avoids deep frying and produces a great tasting donut with only 3 to 4 grams of fat, unlike the 15 to 20 grams of fat in other donuts.
Holey Donuts! has created an extended line of ultra low fat gourmet donuts and cinnamon buns. These products are guaranteed to please the palate of even the most discerning donut lover while dramatically lowering fat content with zero trans-fats yet nothing about these donuts tastes low fat, its just amazing. Significantly, Holey Donuts! Ultra Low Fat Gourmet Donuts and Cinnamon Buns contain zero trans- fats,zero cholesterol and no artificial sweeteners or fat substitutes, and they just taste great.

The secret lies in a unique cooking process which avoids deep-frying. Deep frying produces a fat laden greasy donut and now Holey Donuts has changed everything. In addition to the dramatic reduction in fat content, these donuts have as much as 75% less calories than other donuts"
Over 18 varieties of donuts and mouth watering cinnamon buns are currently available for ordering on-line across the country at holeydonuts.net

Holey Donuts! has gained tremendous popularity and much critical acclaim whenever tasted by consumers, "there is nothing ‘low fat’ about the taste of these donuts" says one taster. Holey Donuts! is such a smart concept now we can eat more donuts and not look like one!
sold on the web at

www.holeydonuts.net



These doughnuts are honestly the best we have ever had. You should see my desk right now...its like chum in the water with sharks every where! Thank you so much for sending them, a real treat for all of us. Keep in touch! Alfred Smith
LEHMAN BROTHERS INVESTMANT BANKING NYC

Fri, 14 Jul 2006 14:30:59 -0400
Man they were awesome!!! I shared them with the other 70 people in my
department so that means there are 58 people wishing, lol.

They are good, I am a fan already!!


Thank you,


Christopher Alizio
Product Quality Specialist
QVC Studio Park
484-701-3277


Name : Meghan
Email Address : mghen@sgcib.com
Telephone : 212 92 Madison St. Hoboken, NJ

Comments :
I completely enjoyed receiving your donuts through the ZoneChefs program. It made my day when I would see that I had a Holey Donut on the menu. If you sell out of any midtown or Hoboken locations I would like to know so that I can spread the word!!



Thu, 16 Feb 2006 16:45:43 -0500

I love your donuts! I was introduced to Holey Donuts through ZoneChefs Delivery, and so far I've tried Boston Cream, Lemon, Chocolate Frosted and Raspberry. They are all amazing! It's hard to believe they're low fat. It sounds silly, but I really look forward to the days I find a Holey Donut in my Zone meal bag. They're so yummy, I feel like I'm cheating on my diet. Thanks for the treat!
Dale


Dale O

-----------------------------------------------------------------------------------------------------------------------------------
Name : Denise
Email Address : denitologa@aol.com
Telephone : (310)

Comments :
I had your donuts on the zone chef program.Do you have any stores in the L A area? What about when orders across country? Can I make an order for donuts that is not wholesale? How can I get my local grocery to carry your product?




Mon, 7 Nov 2005 05:54:03 -0500 -----------------------------------------------------------------------------------------------------------------------------------
Name : stephanie
Address :
Comments : Are you reviewing franchisee options? Possibly in Atlanta?
------------------



Comments : Hello: I read about Holey Donuts and fell in love with the idea !! I checked out your website and just think this concept is a great idea ! I enjoy donuts so much, but can only eat one (two, at the most) on any given day due to the high sugar and fat content. I think this is a great idea to reduce the fat and still have an enjoyable eating experience. Just wondering if you are staying locally in NYC for now, or if the sales idea applies nationally. Please let me know. If you would be interested in shipping donuts to Kansas City ! Regards, Douglas Rittenhouse

# posted by Anonymous : 8:16 AM

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# posted by Anonymous : 12:23 PM
... The Donuts are excellent.

# posted by Anonymous : 12:41 PM
my wife brought a bag of these home for a test feast. They are actually very good, especially the coconut cream

# posted by Anonymous : 9:14 PM

I think that the idea of a low fat donut is great.
# posted by Anonymous : 9:49 AM

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# posted by Anonymous : 3:13 PM

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# posted by Anonymous : 4:52 PM

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# posted by Anonymous : 11:03 AM

Comments :
Thank you! These are a fabulous invention. I work from home and my co-workers are based in Colorado Springs CO. They are wondering if Holey Donuts are being sold there . Thanks a million! Brenna



Comments :
Name : debbie

Comments : I must say I was delighted that they were far beyond my expectations..




after reading and seeing your donuts on the site, i am dying to try them, and have been hoping that someone would come out with a lowfat gourmet donut, for what seems like forever to no avail! i am a donut lover, but have given them up since i have been on a lowfat diet now and those regular donuts from krispie kreme, etc really start to add up in calories in fat!
donna t





Hello,
Congratulations on developing what seems to be a great product!
Dominic ,

Woodside, NY 11377

Anonymous said...

The Holy Grail of Donuts...the Low Fat Donut
Forget the ridiculous hype on the new zero trans fat donuts out there.
You should do a story about Holey Donuts!, based out of Brooklyn. They
are Ultra Low Fat, Zero Trans Fats and FABULOUS. Zone Diet even buys
from them. http://www.holeydonuts.net/

Anonymous said...

The Holy Grail of Donuts...the Low Fat Donut
Forget the ridiculous hype on the new zero trans fat donuts out there.
You should do a story about Holey Donuts!, based out of Brooklyn. They
are Ultra Low Fat, Zero Trans Fats and FABULOUS. Zone Diet even buys
from them. http://www.holeydonuts.net/