The Myth Of Market Failure Summary
Food Labeling: Nutrition Labeling of Standard Menu Items in Restaurants and Similar Retail Food Establishments
There is a growing problem of obesity today. According to the CDC, approximately 33.8 percent of American adults are obese. There has been a dramatic increase in the rate of obesity in the past 20 years. No state in America has a prevalence of less than 20 percent of obesity [CDC], a quite astonishing percentage. High obesity rates lead to high rates of blood pressure and diabetes, chronic conditions that are commonly seen today, which in turn can lead to heart attacks and strokes. With the structure of our healthcare system today, it is possible that a vast majority of obese …show more content…
The FDA believes however, that although the usual market failures that validate regulatory action cannot be found, the main support for government action is the absence of nutritional information which stems from the lack of incentives for restaurants to provide that information on their own [Federal Register, 2011]. This absence is a standard for market failure. Information asymmetry can be found here as well as “one party in the transaction has information that puts them at an advantage and the other party at a disadvantage” [Snyder, 2011]. Providing nutrition labels on menu items will give consumers the information they need to make healthier food choices.
Due to the costs that will be involved in conducting a nutritional analysis for menu items there will be some negative impacts. The kaldor hicks efficiency can be seen here as well, a consumer will be worse off as restaurants will have to increase their prices to make up for expenses, however they will be “compensated” as they will now have additional information regarding menu items to help them make informed …show more content…
Regulations that will implement the NLEA must require nutrition labels on food products to include total calories, calories from fat, total fat, saturated fat, sugars, proteins, vitamins and minerals [GPO, 2011] all of which help consumers make wise food choices.
The Menu Education and Labeling Act, also known as MEAL, was conducted on a city and state level in respects to menu labeling on a national level [DeLauro, 2009]. This Act was made in hopes of closing any loopholes in the NLEA act which as stated previously requires most food packages to provide nutrition information. The MEAL act requires that chain restaurants with 20 or more locations to provide consumers with information on calories, sodium, fats and carbohydrates, this indicates that it works hand in hand with the proposed regulation [DeLauro,
There is a growing problem of obesity today. According to the CDC, approximately 33.8 percent of American adults are obese. There has been a dramatic increase in the rate of obesity in the past 20 years. No state in America has a prevalence of less than 20 percent of obesity [CDC], a quite astonishing percentage. High obesity rates lead to high rates of blood pressure and diabetes, chronic conditions that are commonly seen today, which in turn can lead to heart attacks and strokes. With the structure of our healthcare system today, it is possible that a vast majority of obese …show more content…
The FDA believes however, that although the usual market failures that validate regulatory action cannot be found, the main support for government action is the absence of nutritional information which stems from the lack of incentives for restaurants to provide that information on their own [Federal Register, 2011]. This absence is a standard for market failure. Information asymmetry can be found here as well as “one party in the transaction has information that puts them at an advantage and the other party at a disadvantage” [Snyder, 2011]. Providing nutrition labels on menu items will give consumers the information they need to make healthier food choices.
Due to the costs that will be involved in conducting a nutritional analysis for menu items there will be some negative impacts. The kaldor hicks efficiency can be seen here as well, a consumer will be worse off as restaurants will have to increase their prices to make up for expenses, however they will be “compensated” as they will now have additional information regarding menu items to help them make informed …show more content…
Regulations that will implement the NLEA must require nutrition labels on food products to include total calories, calories from fat, total fat, saturated fat, sugars, proteins, vitamins and minerals [GPO, 2011] all of which help consumers make wise food choices.
The Menu Education and Labeling Act, also known as MEAL, was conducted on a city and state level in respects to menu labeling on a national level [DeLauro, 2009]. This Act was made in hopes of closing any loopholes in the NLEA act which as stated previously requires most food packages to provide nutrition information. The MEAL act requires that chain restaurants with 20 or more locations to provide consumers with information on calories, sodium, fats and carbohydrates, this indicates that it works hand in hand with the proposed regulation [DeLauro,