How expensive is a can of Coke if social cost is priced in?

http://www.kurtsp.com/how-expensive-is-a-can-of-coke.html

by arikr • 9 years ago

34 14 9 years ago

orangecat• 9 years ago

Multiply the cost of one case of diabetes ($85,200) by the marginal chance of developing the disease (18%), and divide by the number of 12oz cans consumed over that decade (2555) gives $6.00.

The marginal increase is not 18%, it's 18% of the base rate.

gus_massa2• 9 years ago

I tried to read the research article, but I'm not sure about the notation. One can of coke increase the risk

a) from x% to x+18%?

b) from x% to x*(1.18)%?

viraptor3• 9 years ago

Neither seems reasonable. The a is definitely wrong, or 6 cans would give you diabetes guarantee, which is wrong. The b grows slower, but is still uncapped and speeds up as it grows.

systoll• 9 years ago

The paper's conclusion that a can of coke per day is associated with a 'relative risk' of 1.18. That means X% -> x*(1.18)%, where X is whatever the baseline risk is. The blog introduces the result as increasing 'the likelihood of developing diabetes by 18%', which means the same thing.

It then incorrectly translates this to a 'marginal chance of 18%' -- which means X% -> X+18%. And the math uses that.

X%->X+18% is 'a marginal risk of 18%', or 'an increase of 18 percentage points' or 'a 0.18 increase in absolute risk'.

stephenbez• 9 years ago

Agreed.

The base rate of getting type 2 diabetes is 11%. So if you increase your consumption of sugar sweetened beverages to one serving per day above the average, your chance of getting diabetes is now ~13%.

You increase your absolute risk by 2%. So the average marginal healthcare cost is $85,200*.02 = ~$1700.

I'm not sure how he goes from 1 serving per day to 2555 per decade. I would assume it would be ~3650 servings.

So for every soda you drink, it would add $0.47 in additional medical costs.

But the study also controls for adiposity since people with higher body fat are more likely to get diabetes and are also more likely to drink sugar sweetened beverages.

If you control for that then each drink adds $0.21 in additional medical costs.

viraptor3• 9 years ago

I'm not sure how he goes from 1 serving per day to 2555 per decade. I would assume it would be ~3650 servings.

3650/30*21 = 2555 - 1 serving per work day?

Old_Thrashbarg• 9 years ago

I read this article expecting to hear about negative externalities, but it seems the social cost described here is entirely in "private costs", at least under the assumption of no government-sponsored healthcare.

ggm• 9 years ago

What if you live in an economy with an NHS, and the direct and indirect costs of diabetes mediation are less? (not that it's good, but it becomes an argument in the application of indirect cost into pricing, which breaks the macdonalds burger index apart into shards of social policy costs)

featherverse• 9 years ago

that's okay because they're going to pass those costs onto the community.

et2o• 9 years ago

Would be interesting analysis if done correctly. Unfortunately author mistakes absolute for relative risk. To be fair, this isn't an infrequent thing.

How expensive is a can of Coke if social cost is priced in?

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