The government is concerned that we are eating too much saturated fat. Excessive consumption of saturated fat poses a risk to our health, since it is associated with cardiovascular disease — the number one cause of premature death in the UK — as well as some cancers and diabetes. The Food Standards Agency (FSA) (the government department responsible for protecting the public’s health in relation to food) estimates that the average Briton consumes 20% more saturated fat than the official government recommended amount. In addition, using market research data on the foods people buy, researchers at the Institute for Fiscal Studies (IFS) point out that it is households with lower incomes that are the most likely to buy excessive quantities of saturated fat (see Figure 1).
Should the government intervene to try and reduce the amount of saturated fat we consume? The answer is not obvious. As economists, we tend to believe that it is consumers themselves who are best suited to make decisions about their own consumption — they are in the best position to spend their budget on the goods that provide them with the most utility. Why should the government — or any other external body — know better? However, sometimes market failures arise. A market failure is a situation where free exchange (which involves firms and consumers making choices without government interference) leads to an inefficient outcome (one where some people can be made better off without harming others).
Your organisation does not have access to this article.
Sign up today to give your students the edge they need to achieve their best grades with subject expertise
Subscribe
