The price of a cheesburger is not the true cost

nytlMark Bitman – NY Times – July 15, 2014

In 2005, the House of Representatives passed an act that forbade consumers to sue fast-food operators over weight gain. “The Cheeseburger Bill” (formally, “The Personal Responsibility in Food Consumption Act”) attempted to legislate the message that the costs of fast food are personal, not social, and certainly not a consequence of selling harmful food at addictively low prices.

The reality is different, as we begin to understand the extent of the financial and economic costs wrought on our society from years of eating dangerously. That’s a different kind of cheeseburger bill; the butcher’s bill, if you like: The real cost.

What you pay for a cheeseburger is the price, but price isn’t cost. It isn’t the cost to the producers or the marketers and it certainly isn’t the sum of the costs to the world; those true costs are much greater than the price.

This is an attempt to describe and quantify some of those costs. (I have been working on this for nearly a year, with a student intern, David Prentice.) It’s necessarily compromised — the kinds of studies required to accurately address this question are so daunting that they haven’t been performed — but by using available sources and connecting the dots, we can gain insight.

Whatever the product, some costs are borne by producers, but others, called external costs — “externalities,” as economists call them — are not; nor are they represented in the price. Take litter: If your cheeseburger comes wrapped in a piece of paper, and you throw that piece of paper on the sidewalk, it eventually may be picked up by a worker and put in the trash; the cost of that act is an externality. Only by including externalities can you arrive at a true cost.

Almost everything produced has externalities. Wind turbines, for example, kill birds, make noise and may spin off ice. But cheeseburgers are the coal of the food world, with externalities in spades; in fact it’s unlikely that producers of cheeseburgers bear the full cost of any aspect of making them. If we acknowledge how much burgers really cost us we might either consume fewer, or force producers to pick up more of the charges or — ideally — both.

We estimate that Americans eat about 16 billion burgers a year of all shapes and sizes, based on data provided by the NPD Group, a market research firm. (The “average” cheeseburger, according to the research firm Technomix, costs $4.49.) And our calculation of the external costs of burgers ranges from 68 cents to $2.90 per burger, including only costs that are relatively easy to calculate. (Many costs can’t possibly be calculated; we’ll get to those.)

The big-ticket externalities are carbon generation and obesity. Environmental Working Group’s “Meat Eater’s Guide” (2011) estimates the carbon footprint of beef cattle at 27 pounds of CO2 equivalent per pound; the use of “spent” dairy beef in burger meat reduces that slightly, but we can say that each pound of burger meat accounts for roughly 25 pounds of CO2 emissions. (Cheese counts, too: It produces 13.5 pounds of CO2 equivalent per pound, and even bread has a carbon footprint.)

The cost of this carbon is hard to nail precisely, but the government’s official monetary valuation of greenhouse gas pollution is roughly $37 per metric ton of CO2 emissions. Many experts, however, double that rate; others multiply it nearly tenfold. So the monetary value of the carbon emissions produced by the average cheeseburger might range from 15 cents (the official government rate), to 24 cents (conservative independent sources) and $1.20 (high independent). The average of these three estimates comes out to 53 cents per burger.

The calculable chronic disease costs are similar. There’s some evidence that red meat intake may increase risk of cardiovascular disease and mortality, but like many of the speculative externalities discussed below, it’s impossible to assign a cost to this. (If red meat were further implicated in cardiovascular disease, the true costs of a burger would rise significantly.)

In any case, a main factor in the rise of obesity has been an increase in the availability of calorie-dense foods, and burgers played a big role in this process. Between 1970 and 2000, per capita calorie intake increased by 24 percent, and the “food-away-from-home sector” grew to nearly half of all food we eat. Restaurants, of course, are the source of most burger consumption.

Between 2007 and 2010, 11.3 percent of adult Americans’ daily caloric intake came from fast food. Correlation is not causation, of course, and it seems likely that foods high in sugar and other hyperprocessed carbohydrates are most responsible for high obesity rates, but burgers certainly played a role in rising caloric intake.

To estimate the share of obesity-related costs resulting from burger consumption, we estimated the share of calories coming from burgers in fast-food restaurants, where the majority are eaten. Assuming that the 11.3 percent of calories is proportional to the incidence rate of obesity (it may be higher), its associated health risks, and its treatment costs, up to 15 percent of fast food’s share of direct and indirect costs arising from obesity (about 1.65 percent of the whole) are attributable to burgers.

The link between obesity and a handful of deadly chronic diseases — arthritis, cardiovascular disease, hypertension, Type 2 diabetes and some cancers, among others — is well documented, as is their enormous economic burden. Direct medical diet-related costs are currently pegged at about $231 billion annually.

These numbers above would mean that this cost of burgers is about $4 billion per year (from fast food burgers only!), which averages out to 48 cents per burger. (Some put these costs five or six times as high, and there are indirect costs as well; again, we’re being conservative.) And between 2010 and 2030, the combined costs arising directly from diseases related to obesity could increase by an additional $52 to $71 billion each year. This could double the cost per burger in additional health costs alone.

Some other costs are only vaguely calculable, and we have numbers, but the ranges are so great that they’re useless; what matters, though, is that the numbers are above zero. There are elevated nitrates in water supplies resulting from the chemical fertilizers used to grow corn to feed cattle (the city of Des Moines has been forced to spend $3.7 million to build a water treatment facility for precisely this reason; then there’s the famous “dead zone” in the Gulf of Mexico); the cost of food stamps and other public welfare programs made necessary in part by the ultralow wages paid at most fast-food operations; the beef industry’s role in increasing antibiotic resistance, which costs, according to the Centers for Disease Control and Prevention, something like $55 billion a year; some measure of E. coli illnesses; and land erosion, pesticide residues, direct corn subsidies, injury rates at slaughterhouses, and so on.

Each of these adds pennies or less to the external costs of a cheeseburger. But although they may be trivial individually (unless of course, you’re being directly affected by them), they add up. Even more difficult to calculate are the “cost” of a shortened life, or the value of loss of biodiversity that results from the destruction of rain forests to provide land for cattle or their feed. There is even an emerging body of research linking decreased male sperm quality to mothers’ beef consumption.

Last year, burger chains grossed about $70 billion in sales. So it’s not a stretch to say that the external costs of burgers may be as high as, or even outweigh, the “benefits” (if indeed there are any other than profits). If those externalities were borne by their producers rather than by consumers and society at large, the industry would be a highly unprofitable, even silly one. It would either cease to exist or be forced to raise its prices significantly.

In this discussion, the cheeseburger is simply a symbol of a food system gone awry. Industrial food has manipulated cheap prices for excess profit at excess cost to everyone; low prices do not indicate “savings” or true inexpensiveness but deception. And all the products of industrial food consumption have externalities that would be lessened by a system that makes as its primary goal the links among nutrition, fairness and sustainability.

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