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Brooks Wilson's Economics Blog: The Nanny State and Salt

Tuesday, April 20, 2010

The Nanny State and Salt

Principles textbooks teach that markets are generally the best way to organize economic activity but that markets sometimes fail because of externalities, public goods, market power and informational asymmetries.  In these cases, government intervention may increase societal welfare.  The Food and Drug Administration is about to regulate the sodium content of food. 
The Food and Drug Administration is planning an unprecedented effort to gradually reduce the salt consumed each day by Americans, saying that less sodium in everything from soup to nuts would prevent thousands of deaths from hypertension and heart disease. The initiative, to be launched this year, would eventually lead to the first legal limits on the amount of salt allowed in food products.

The government intends to work with the food industry and health experts to reduce sodium gradually over a period of years to adjust the American palate to a less salty diet, according to FDA sources, who spoke on condition of anonymity because the initiative had not been formally announced.

Officials have not determined the salt limits. In a complicated undertaking, the FDA would analyze the salt in spaghetti sauces, breads and thousands of other products that make up the $600 billion food and beverage market, sources said. Working with food manufacturers, the government would set limits for salt in these categories, designed to gradually ratchet down sodium consumption. The changes would be calibrated so that consumers barely notice the modification.
What market failure justifies the "complicated" (and expensive) government intervention into the food processing market?
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