Tag Archives: CDC

To solve a problem, first understand its cause

A key principle of smart regulation is that regulators should first understand the nature, extent, and cause of the problem they are trying to solve before they write a regulation. (It’s even the first principle of regulation listed in Executive Order 12866, which governs regulatory analysis and review in the executive branch).

On the federal level, this principle is often honored more in the breach than in the observance. For a good example of what can happen on the state and local level when this principle is ignored, one need look no further than a recent study on the costs of excessive alcohol consumption funded by the Centers for Disease Control.

1655-barrel for drunk

Credit: Christy K. Robinson

The study estimates that binge drinking is responsible for about 76 percent of the social costs of excessive drinking, and underage drinking is responsible for another 11 percent. (“Binge drinking” was defined as 5 or more drinks on the same occasion for a man, and 4 or more on the same occasion for a woman. All underage drinking was classified as excessive since it’s illegal.)

Taking these findings at face value, the logical conclusion is that the most sensible policies to reduce the costs of excessive alcohol consumption would target binge drinkers and underage drinkers. Unfortunately, the authors recommend a grab-bag of policies that would penalize anyone who consumes alcohol — not just binge drinkers and underage drinkers.

They refer the reader to the Centers for Disease Control’s “Guide to Community Preventive Services,” which endorses policies like increased alcohol taxes, limitations on days alcohol can be sold, limiting sale hours, limiting the density of retail outlets, and government ownership of retail outlets. The only policies recommended that specifically target binge drinkers or underage drinkers are electronic screening and intervention, and enhanced enforcement of laws prohibiting sales to minors.

Two other initiatives mentioned in the Community Guide that sound like they might help — enhanced enforcement of “overservice” laws and responsible beverage service training — are not recommended because an insufficient number of studies have been done to test their effectiveness. If the CDC took the principles of sound regulatory analysis seriously, it would focus more resources on researching such targeted interventions and less on advocating broad-brush alcohol control policies that penalize citizens who have done no wrong.

Most readers can probably recall a bad experience with “group punishment” in grade school, when an entire classroom or grade got blamed for the misbehavior of a few miscreants. Many of the CDC’s preferred alcohol policies constitute group punishment on a massive scale, applied to adults. A careful focus on the root causes of the problem would help government avoid punishing everyone for the misdeeds of a few.

Taxing People to Advocate for Taxing People

Back in April I blogged on a CDC program that seemed to be using taxpayer dollars to fund lobbying for more taxes. In his column this week, George Will picks up on the same program and offers a few more details. Here is a snippet:

In Cook County, Ill., according to an official report, recipients using some of a $16 million CDC grant “educated policymakers on link between SSBs [sugar-sweetened beverages] and obesity, economic impact of an SSB tax, and importance of investing revenue into prevention.”

Along the way, Will also highlights some excellent work coauthored by my colleague Sherzod Abdukadirov. Leaving legality aside, Will asks, “is such “nutrition activism” effective?”

Not according to Michael L. Marlow, economics professor at California Polytechnic State University, and Sherzod Abdukadirov of the Mercatus Center at George Mason University. Writing in Regulation (“Can Behavioral Economics Combat Obesity?”), a quarterly publication of the libertarian Cato Institute, they powerfully question the assumptions underlying paternalistic policies such as using taxes to nudge individuals to make consumption choices that serve their real but unrecognized interests — e.g., drinking fewer SSBs.

 

Illinois’ Bad Habit Continues: More Targeted Tax Incentives

Illinois’ Community Development Commission is scheduled to meet today to discuss bringing the JMC Steel Group Inc to Chicago by means of tax incentives. The CDC’s plan includes providing the company with $1.1 million in tax-increment financing.

Providing targeted tax incentives is one of Illinois habitually-employed development policies.  However, the recent hike in the corporate income tax rate coupled with the nearing expiration of some of these tax incentives has caused many companies to consider leaving the state.

In 1989 Sears threatened to leave Illinois but was convinced to stay after receiving $178 million in state and local subsidies. Not surprisingly, Sears’ threat to leave surfaced again earlier this year and Illinois’ solution was to offer more tax incentives to get the company to stay.

Other companies that have threatened to leave Illinois this year include, among others, First Navistar International, Motorola Mobility, and CME Group.  Although the plans to convince CME Group to stay are still in the making, $100 million in financial incentives seemed to be enough to keep Motorola around for a while longer.

Not only should Illinois stop focusing on providing targeted tax incentives to get companies to move to the state but it also needs to stop providing additional tax incentives every time a company threatens to leave Illinois. This is a dangerous habit considering tax breaks are set to expire for a 107 companies in Illinois over the next three years.

If Illinois continues to turn to its portfolio of targeted tax incentive programs as a means of achieving development then it will further deteriorate the state’s ability to foster business activity.