Economic Brief Rewrite - Assignment Example

Economic brief rewrite Economic brief rewrite NYS Sugar bad Taking the position of a health economist in New York his paperwill prepare a document supporting the NYC sugar ban by addressing a number of arguments with economics evidence or economics rationale. Some of the arguments are; obesity is both a personal health issue and a public health issue, people tend to make seemingly irrational choices to consume or guzzle excessive sugary drinks, and governmental regulation is imperative for correcting people’s seemingly illogical behaviors (Miguel & Kremer, 2004). Apart from being an individual health issue, obesity is also a health issue that affects the public since its effects affect the society. Those who suffer from obesity have a high likelihood of developing other diseases that are the prime causes of preventable death, which include type 2diabetes, stroke, heart disease, and some types of cancer. The New York Department of Health point out that, more than half of the NYC inhabitants suffer from obesity. In October 2012, the Board of Health of NYC send Mayor Bloomberg a proposal asking him to ban sugary drinks such sports drinks, teas, and soda (Miguel & Kremer, 2004). Additionally, the proposal requested the Mayor to outlaw more than 16 ounces in stadiums, fast-food joints, movie theaters, other eateries, and restaurants that serve prepared foods. Ideally, the banning policy aims at reducing New York residents from consuming sugary foods and drinks in excess. However, there are some groups trying to blockade this decree by the Mayor through opposing it as they claim that Ney York residents have a right to choose what they wish to consume in terms of beverages. Sincerely, the opposes of this motion are mainly producers of these beverages who believe that they stand to lose hundreds of thousands of dollars through decreased sales if Mayor Bloomberg succeeds in his quest (Miguel & Kremer, 2004). As much as they want to see New Yorkers continue to enjoy their right to choose their drinks, it is also essential to note that, the United States government is undertaking a heavy budget since it has to meet half of the total costs of obesity treatment. With reference to the New York Department of Health, the total cost of treating obese patients is $150 billion whereby half of the government settles half of it through Medicaid and Medicare. In addition, obese people are fragile due to their health status. The cost of maintaining an employee that suffers from obesity is extremely high. Productivity goes down when a company employs obese people since such people tend to get sick often and miss work. This shows that, companies tend to avoid employing people who suffer from this disease. As a result, they opt to outsource their work outside the community boundaries. It is seeable that, obesity is not just an individual health problem, but also a communal issue (Miguel & Kremer, 2004). The level of unemployment goes up as companies outsource most of their jobs since they are unable to employ obese people, as their cost of maintenance is always high. Agreeably those who are opposing the proposal to ban the sale of sugary drinks and reduce the number of eateries and joints selling prepared foods do not have the best health interests of New York residents at heart. Consuming over 16 ounces of sugary drinks has negative externalities that create a failed market, which produces extra goods on a suboptimal price and paves way for the necessary, visible hand otherwise termed as the government intervention to chip in with the view of reaching the optimal price and quantity. One can use the Time Inconsistency model where people try to stop drinking sugary drinks and upholding negative eating behaviors but they always say that they will stop tomorrow or the day after tomorrow (Miguel & Kremer, 2004). This model opines that individual short-term wants (the utility obtained from sugary beverage) conflict with long term wants (living without chronic diseases utility). Individuals will continue consuming these sugary foods and sugary drinks hoping that it will reach a time when they will stop. Nonetheless, banning these sugary drinks with up to 16 ounces will rationally make New Yorkers engage in conscious efforts towards their consumption of sugary drinks. In effect, this will reduce the level at which people consume sugary drinks hence reduce the rate at which obesity is affecting the lives of New York residents. 2. The externality of the article “Miguel E, Kremer M. Worm: Identifying Impacts on Education and Health in the Presence of Treatment Externalities. Econometrica. 2004; 72(1): 159-217.” Miguel, in his article, discusses the missed externality advantages of treating diseases. Specifically, Miguel carried out a mass treatment within schools of Intestinal helminthes also known as worms in Kenya. Through his research, he found that school based collective treatment is far much better and effective compared to the personal level treatment ways. He also revealed that the new system was both cost effective and reduces the issue of skipping school and increases participation for both untreated and treated students. According to Miguel findings, such a phenomenon was because of externalities, which meant that treating one of the affected students benefited many other students by reducing their extent of getting the affected student spread the ailment (Miguel & Kremer, 2004). Entirely, the externality identified by the article subject indicates it is a type of positive externality wherein it has positive impacts for the intervention system but it also entails that there is a form of market failure at the same time. Explanation for the externality likelihood to cause market failures As seen, the externality is likely to cause market failures specifically in the drugs used to treat and/or prevent parasitic worms. The process of de-worming results to externalities, which are positive. Thus, under consumption becomes possible at times when the free market optimal is as suboptimal while price is high at the other side. Positive externalities occur mainly because sometimes the private marginal benefit is lower when compared to the social marginal benefit. On the other end, market positive externalities are available when the person being de-wormed has social welfare (Miguel & Kremer, 2004). In this case, the student who buys the medicine meant for de-worming incurs the total cost of the drug but other students benefit from the medicinal consumption. This shows that the amount of the drug bought is less compared to the optimum quantity. Individuals buy medicine when the utility attached to it is more than its cost but because of the presence of positive externalities, the likelihood to underestimate the utility of that drug by the individual is high. Apart from that, it is seeable that individuals will not include any benefits to the society into their set equation for utility. Hence, the likelihood of externalities to cause market failure is high given the situation that either people will tend to buy products that have low prices or the utility obtained from them is higher than their cost (Miguel & Kremer, 2004). Moreover, the equation of their utility will not balance, as individual’s quest for optimal prices will continue to rise. In cases where one person buys a product, the likelihood of the others in the society to benefit is high since the buyer will consume the drug and as the research shows, other students benefited from drugs that were to be purchased by individual students. 3. Draw potential policy implications referring to the major summaries of the survey The government should come up with policies that seek to either increase the quantity of drugs consumed or decrease the amount of money spent on medicine. The government can do so by subsidizing the cost of medicine. However, to lower the price of medicine and increase its supply, the government should either come up with new technology or create a policy that will shift the supply curve with an outward impact particularly by increasing the number of suppliers in that sector. When the government helps shift the supply curve outwards the quantity being supplied will definitely increase hence lower the amount of money spent on medicine. Lower prices and increased supply will be an ideal policy for this drug. Further, the government can shift the demand curve through campaigns, which aim at creating awareness by changing people’s taste, a move that would result to lower prices and increased supply. Note that, this would not sound as the most substantial policy since it might disregard the consumption of people with low social income (Miguel & Kremer, 2004). Conversely, the government can shift the demand curve by subsidizing the medicinal price. The factor of subsidization would offset an increase in the cost because of the demand curve thus there will be an increase in optimum quantity but there will be no price increase. Reference Miguel, E. & Kremer, M. (2004). Worm: Identifying Impacts on Education and Health in the Presence of Treatment Externalities. Econometrica, 72 (1): 159-217. Read More