Sugar Sweetened Beverages and Externalities Sugar

Running head: Sugar Sweetened Beverages and Externalities
Sugar Sweetened Beverages and Externalities
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Sugar Sweetened Beverages and Externalities1
This essay studies the obesity problem in Australia and analyses the contribution of sugar
sweetened beverages in aggravating the concerned problem. Additionally, it studies the
associated health issues that occurs due to obesity in all age groups and critically analyses the
policies that are suitable to reduce obesity problem by controlling consumption of sugar
sweetened beverages.
Obesity is a worldwide problem and one of the reason of occurrence of obesity is over
consumption of sugary products such as sugar sweetened beverages. The problem of obesity is
prevalent in Australia too. As per adult obesity data, Australia is at rank 27 with 29% of the adult
population suffering from the obesity problem in 2015. However, the percentage has increased
in 2017-2018 by 2% and reached 31%. Additionally, 12.4% of children in Australia has obesity
problem in 2015 and for the children this percentage has increased drastically to 25% in 2017-
2018 (Australian Institute of Health and Welfare, 2019). Obesity itself is not a critical kind of
disease but physical condition of a body occurs mostly due to over calorie consumption.
However, obesity is the reason for emergence of various kind of disease and many of them are
fatal. Due to over consumption of sugary beverages the children become obese and more prone
to type 2 diabetes and apart from that, bones become weak and prone to fracture. The kids with
high consumption of sugar are prone to cardiovascular diseases, become resistant to insulin and
in addition to that, dental erosion occurs. Along with all these, the possibility of cancer increases
in adults. It has been found by WHO that chances of occurrence of 13 types of cancers increase
due to obesity (Wiki.cancer.org.au., 2019). Sugar is a major reason of obesity and it has been
found by studies that the 52% of the consumed sugar by Australians are sourced from sugar
sweetened beverages (SSB) (Miller et al., 2019). Thus, it is evident that SSBs play a crucial role
in increasing obesity among Australian people. It has been found too that the cost of obesity in

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Sugar Sweetened Beverages and Externalities2
Australia in 2011-2012 was $8.6 billion including both direct and indirect costs (Australian
Institute of Health and Welfare, 2019). Thus, it can be understood that around 50% of this cost is
coming from consumption of SSBs. Hence, the cost of consumption of SSB in Australia and it
should be mitigated immediately.
Most people love to consume sugar and majority of them love SSBs and consume then in
the form of packaged fruit juice, soft drinks, sweetened coffee and many more. However, over
consumptions of anything is harmful for health and the fact is true for SSBs too. However, utility
extracted from consumption is not drawn from physical health factors but from taste preference
and habitual factors. Thus, demand for SSBs under free market is decided where utility is
maximized from the consumption. Due to this reason, people tend to consume more SSBs as
there is no restriction and thus indulges themselves in over consumption. Further, it leads to
health issues caused due to consumption of SSB. Thus, obesity occurs that increases the chances
of various diseases and thus several health problems occur. These health issues accrue some cost
and that are termed as social cost in theory of economics. The graphical representation of this
economic condition is shown in figure 1.
Figure 1: Social Cost of
SSB Consumption