Morning Report this morning gave considerable coverage to a new research report from the investment bank Morgan Stanley, Sustainable Economics: The Bitter Taste of Sugar. The authors argue that rising obesity levels will act as a major drag on economic growth and productivity across the advanced world over the next 20 years, lowering growth rates by around 0.5 percentage points per annum (roughly 18 per cent of GDP cumulatively over 20 years).
Reports like this are like a gift to those who loudly insist governments have to “do something” about the voluntary private consumption of sugar. But there is almost nothing solid to back up the Morgan Stanley assumptions. And not many things change annual growth rates semi-permanently by 0.5 percentage points. There is some discussion in the report of the way in which obese people may be less productive than otherwise, but nothing to indicate whether people are more likely to become obese if they are already less productive for other reasons, or to back up the estimates/assumptions at an aggregate level. And there is no attempt to back-test the numbers they use – for example, does the changes in each country’s obesity rates in recent decades correlate, even loosely, with changes in the respective country’s growth rate?
Of course, even if the estimates were accurate, it is hard to believe there is a policy problem. These are private choices.
But if they were accurate – and we were happy to ride roughshod over private preferences – it would suggest any easy way of closing the New Zealand productivity gap: reduce our per capita sugar consumption to, say, Japanese levels and in 20 years we would well on our way up the OECD league tables. But, most likely, it just isn’t so.