This is a few weeks old, but I’m just seeing it now. Accidental vacations have a way of encouraging information delinquency. Anyway, the underlying concepts won’t age, so here it is:
Trans fats are largely synthetic fats widely used in fried foods and baked goods. There is substantial medical evidence that they are significant contributors to heart disease (perhaps increasing the incidence of heart disease by as much as 6 percent) because they both raise the cholesterol that is bad for you (LDL) and lower the cholesterol that helps to protect your arteries against the effects of the bad cholesterol (HDL). About half of New York City’s 20,000 restaurants use trans fats in their cooking; and roughly a third of the caloric intake of New Yorkers comes from restaurant meals.
That’s from Richard Posner, at The Becker-Posner Blog. It’s a fair enough assessment of trans fats and why health officials think it’s bad. There is no harm in information, right? But how do those facts justify a complete ban on the ingredient in all New York City restaurant meals?
What is missing in this analysis is a cost that, ironically, a great Chicago economist, George Stigler, did more than any other economist to make a part of mainstream economic analysis: the cost of information. It might seem, however, that the cost of informing consumers about trans fats would be trivial–a restaurant would tell its customers whether or not it used trans fats, if that is what they’re interested in, and if it lied it would invite class action suits for fraud. But there is a crucial difference between the cost of disseminating information and the cost of absorbing it.
When I first read through this, I’d intended to discuss “the cost of absorbing it” in this context. But that would be less interesting than this, from later in the paragraph:
Actually the danger would be impossible to explain to diners, because it would depend on the diner’s average daily consumption of trans fats, which neither the diner nor the restaurant knows.
Want to take any guesses about who else doesn’t know the diner’s average daily consumption of trans fats? The government, of course, although it’s less far-fetched to believe that the government wants to know. Rather than the invasive, suspect process needed to keep an accurate, or even approximate, tally, it’s easier to just ban everything. That way, the government knows how much trans fat diners will consume in restaurants.
The acceptance of paternalism continues:
In such a situation, even those of us who distrust government regulation of the economy should be open to the possibility that the ban on trans fats would produce a net improvement in the welfare of New Yorkers by satisfying a preference that most of them would have if the cost of absorbing information about the good in question were not prohibitive.
There are tidbits of possible solutions sprinkled throughout the entry. Instead of less troublesome tactics such as mandatory labeling and government marketing against trans fats, Judge Posner finds government prohibition amenable. Unreal. The cost is less prohibitive in either of my hypothetical solutions, although they’re still far from libertarian dreams. Judge Posner’s conclusion is incompatible with liberty.
Hat tip: Hit & Run