I was reading a Faunalytics report on people who stopped being vegan or vegetarian, via the EA Forum, and was surprised to see:
by some estimates, a Big Mac would cost $13 without subsidies and a pound of ground meat would cost $30.
This seemed much too high to me: I know we subsidize meat heavily, but that’s a much bigger ratio than I remembered seeing. Clicking through to the source, and 2022 AEIR (angle: anti-subsidy) blog post I see:
Research from 2015 shows this subsidization reduces the price of Big Macs from $13 to $5 and the price of a pound of hamburger meat from $30 to the $5 we see today.
Clicking through to their source, a 2015 Berkeley Entrepreneurship & Technology Technical Report (angle: anti-climate change) I see:
The U.S government spends $38 billion each year to subsidize the meat and dairy industries, but only 0.04 percent of that (i.e., $17 million) each year to subsidize fruits and vegetables. A $5 Big Mac would cost $13 if the retail price included hidden expenses that meat producers offload onto society. A pound of hamburger will cost $30 without any government subsidies.
This is uncited, and not at all plausible. In 2013 a Big Mac cost $4.56, so they’re claiming $8.44/burger. There are about 550M Big Macs sold annually, so the total Big Mac subsidy would be $4.6B. That’s 12% of the entire $38B. And Big Macs are only 0.4% of US beef consumption (25.5B lb of beef, 1/5lb each, 550M/y) let alone all the other subsidized foods.
I did a bit more looking and found David Simon claiming in his 2013 book Meatonomics that the retail price of a big mac would be $12. This is close enough that it might be the source of the claim. He breaks it down as:
$0.38 for cruelty. A total of $20.7 billion in cruelty costs is imposed on Americans each year. (Extrapolated from a study in which auction participants bid to end cruel farming practices.)
$0.67 in environmental losses. This is a small piece of the $37.2 billion in annual environmental costs related to U.S. animal food production each year. The figure includes the costs of soil erosion, climate change, damage from pesticides and fertilizers, devaluation of real property, and manure remediation.
$0.70 in subsidies. Toss in a few coins from the $38.4 billion in government subsidies that American taxpayers pay to fund the meat and dairy industries each year.
$5.69 in health care costs. The biggest slice of the pie is a chunk of the $314 billion in health care costs incurred by Americans each year to treat those cases of cancer, diabetes heart disease, and food poisoning related to meat and dairy consumption.
Now, health care costs are not what I’d normally consider a subsidy, and Simon doesn’t claim it is one. But it also looks like each of these national numbers was converted into a per-Big Mac number by assuming Big Macs are responsible for 1% of the total:
550M / ($20.7B / $0.38) = 1%
550M / ($37.2B / $0.67) = 1%
550M / ($38.4B / $0.70) = 1%
550M / ($314B / $5.69) = 1%
While 1% is not as implausible as 12%, that’s still oddly high. If we look just at the health claim, I don’t know where they’re getting $314B but I see Springmann 2018 claiming $71B for red meat. This would make Big Macs responsible for 6.5% of the total health impact of red meat despite being only 0.4% of beef consumption (see above).
In short, this statistic is junk.
Note another angle on the healthcare costs. The ground truth reality is likely the same argument tobacco companies made. Heart diseases often kills people when they are younger, and have consumed less in retirement or medicare funds. So like smoking, it’s possibly a net savings to governments for healthcare costs.
I do not think this is entirely accurate. Lung cancer in smokers hits unusually young people because, well, they are smokers. Heart disease is a disease of old age and accelerating it somewhat through an unhealthy diet would have complex effects. However, making matters even more complicated, ultraprocessed foods also promote cancers and obesity—the latter is definitely a huge healthcare burden which does not kill people immediately.
This is hard to model since there can be a shift from a disease that kills slowly to one that kills quickly and early (dementia to lung cancer), but you can have also the opposite shift (e.g. from a non-disease state to chronic COPD and frailty preceding death).
All we can say for sure is that the harmful effects of smoking and junk food diets may be offset to some extent. More so for smoking than junk food.
Either way, it would appear the consensus is that “in high-income countries, lifetime health care costs are greater for smokers than for non-smokers, even after accounting for the shorter lives of smokers”
https://www.tobaccoinaustralia.org.au/chapter-17-economics/17-2-the-costs-of-smoking
I understand the issue wasn’t healthcare costs but total cost to the government.
It means if you were playing ’simGovernment” from a bird’s eye view, and you do not care about the fate of individuals, you are trying to maximize the government’s power and revenue, this might be a profitable tradeoff.
You can abstract it as a “card” from an options menu you can select:
[beef subsidy]
+ farmer votes
- average lifespan
+ healthcare costs
- total cost per citizen
NPV of choice: + <some number> per citizen
You can think of this case where as a government official or a gamer playing the “government” as a side your interests aren’t aligned with the population’s happiness or lifespan as a case of misalignment.
Lung cancer affects old people.
Also, while your link claims that lifetime healthcare costs are greater for smokers, it does not claim it is a consensus, but specifically mentions that many people claim the opposite. And that’s before getting to Gerald Monroe’s point.
Unclear. The overwhelming majority of healthcare costs for the median American come in the last 6 months of life. The “least costly” method of dying is usually passing away in your sleep out of the blue.
The types of diseases correlated with Big Mac consumption or smoking are not usually “pass away in your sleep without much medical intervention.” They are more likely to be the types of diseases that carry with them long-term, relatively high cost interventions (dialysis, heart surgery, gastric bypass, and other obesity-related interventions.) Same with smoking—significant levels of medical care are allocated to treating people with lung cancer.
While its possible some of those savings are recouped by moneys otherwise sent as social security payments or whatever, it seems unlikely they are a net savings.
This is to say nothing about people who might retire early because of preventable disease (shortened health spans where they provide society with useful work) and other reasons obese people might not produce as much net output that they otherwise would in the alternative where they did not consume so many Big Macs.
So, perhaps a better statistic might be:
$0.15 for cruelty (divide by 1%, multiply by 0.4%, to reflect the true fraction of beef consumption represented by big macs)
$0.27 for environmental damages (divide by 1%, multiply by 0.4%)
$0.28 for direct subsidies to the meat industry (divide by 1%, multiply by 0.4%)
$0.51 for health costs ($71B cost of red meat consumption per year, multiply by 0.4% fraction of red meat attributable to big macs, divide by 550 million big macs sold per year.)
For a total negative-social-externalities-per-big-mac of $1.21?
Of course, some of these estimates might swing wildly depending on key assumptions...
the “cruelty” number might go to zero for people who just subjectively say “I don’t care about animal cruelty”, or might go much higher for EAs who would bid much higher amounts than the average american in a hypothetical utility-auction to end cruel farming practices.
I’m a bit suspicious of the environmental damages number being potentially exaggerated. For example, the “devaluation of real property” seems like it isn’t a negative externality, but rather should be fully internalized by farmers managing their own land and setting the prices of their products. (Unless they are talking about the devaluation of other people’s land, eg by the smell of manure wafting over to a neighboring suburb?)
As Gerald mentions, maybe the healthcare costs are actually negative if red meat is causing people to die younger and more cheaply. But it might be best to calculate a QALY metric, valuing lives at $50K per year or whatever is the standard EA number—this might make the healthcare cost even much larger than the $0.51 per big mac that appears based on healthcare costs.
Personally, I love the idea of trying to tax/subsidize things to account for social externalities. But of course the trouble is finding some way to assess those externalities which is fair and not subject to endless distortion from political pressure, ideological fads, etc. (For more on the practical difficulties of theoretically-perfect Pigouvian taxation , see this post by economist Bryan Caplan.) So I’d be happy to see more discussion of this Big Mac question; I’d encourage you to make a cross-post to the EA Forum!
I do think that’s better, but my guess is if one of us got the book and looked at how they calculated their totals we’d be pretty unimpressed and not see them as worth building on.
Big Macs are 0.4% of beef consumption specifically, rather than:
All animal farming, weighted by cruelty
All animal food production, weighted by environmental impact
The meat and dairy industries, weighted by amount of government subsidy
Red meat, weighted by health impact
...respectively.
The health impact of red meat is certainly dominated by beef, and the environmental impact of all animal food might be as well, but my impression is that beef accounts for a small fraction of the cruelty of animal farming (of course, this is subjective) and probably not a majority of meat and dairy government subsidies.
Doesn’t make sense to use the particular consumer’s preferencces to estimate the cruelty cost. If that’s how we define the cruelty cost it then the buyer should already be taking it into account when making their purchasing decision, so it’s not an exernality.
The externality comes from the animals themselves having interests which the consumers aren’t considering
The issue is that there might be no objective way to compare an animal’s interests to a human’s interests.
We should definitely not expect the “true fraction of beef consumption” to be proportional to impact. Steaks are consumed basically the same way as they were before subsidies (though in much larger quantity); they don’t respond much to the subsidy to take advantage of it. Fast food isn’t restricted to being prepared or sourced in a particular traditional way and therefore will change itself to best exploit subsidy. Estimating that effect as a 2.5x multiplier seems like a perfectly good conservative approximation, so you should just stick with 1%.
1% isn’t high. If they’re 0.4% of beef consumption, and Big Macs (like most fast food) are heavily optimized for cost, then we should expect them to be far more efficient at benefiting from subsidies than traditional means of beef consumption. A factor of 2.5 seems like a perfectly good conservative estimate for that efficiency.
Beef is far from the only meat or dairy food consumed by Americans.
Does someone know a good analysis of the real effects of subsidies on price?
I think you’re misusing this meme. You’ve watched the American Psycho scene about comparing business card typography and him being one-upped repeatedly, right? I don’t see how that fits here.
No no, that’s an explicit part of it. The crack in the voice of Bateman is included in my reaction as someone who has spread this myth once or twice. Also as someone who wishes he had caught this misconception before and posted about it.
Thanks for clarifying! As someone who hasn’t seen the movie I was missing that.
Oh, I see. I looked at the original EA post but you didn’t seem to be the author of it, so I figured that wasn’t it.
Looking at the negative karma and positive agreevotes:
I watched the karma total flip up and down. The Nash equilibrium is to strong downvote because after the comment has a low karma total, social consensus becomes that I’m being totally ironic about my appreciation of Jeff’s scholarship.
My interpretation was that the downvotes were people not liking seeing generic reply gifs here, especially for something we have a specific interface for (voting), while the agreevotes were for the content of the gif?
Yup. I’m one such person who downvoted because I don’t want people to reply with gif-memes, and agree-voted because I agreed with it.
That was mostly what it was, but before it got downvoted significantly I watched two factions fight about it for a little bit, until they stopped fighting