Tracing consequences both seen and unseen.
Christine HarbinThe Indoor Tanning Tax: Behavior Deterrent or Revenue Generator?
Posted at 10:40 am on March 27, 2010, by Christine Harbin

The 10% tax on indoor tanning services is the government’s latest effort to save us from ourselves. From an article on CNNmoney:

An indoor tanning tax will therefore “serve as a signal from the federal government to young people that indoor tanning is dangerous and should be avoided,” said Dr. William James, president of the [American Academy of Dermatology].

This tax represents an unfortunate and disturbing trend in public policy: it’s disguised as a means to “nudge” people into improved behavior, but its primary purpose is to provide an additional revenue stream. This 10% tax on indoor tanning will generate a considerable amount of money: $2.7 billion over ten years. How could a politician resist? State and local governments are facing large deficits, and they are understandably trying to account for their expenses. Government wants individuals to stop their bad habits, but not completely, because then it will generate no revenue from them. If all Americans switched to spray tanners and vitamin D pills as a consequence of this tax, then Congress would have something else to exploit tax.

Moreover, these selective sales taxes assume that the government/”choice architect” actually knows what the “right” choice is for other individuals. Whether something is healthy is subjective; it depends on who you ask and when. Some herald indoor tanning as healthy because it is a source for vitamin D; others say that it is unhealthy because it increases an individual’s risk of melanoma. Also, government is notoriously swayed by the interests of lobbying groups instead of the interests of their constituents — corn syrup is not very nutritious, but it certainly secures a significant amount of assistance from the U.S. government.

I don’t know who to believe — the rent-seeking lobbyist trying to save his industry from an imminent leftward shift of the demand curve, or the U.S. senators who just want my tax money to fund their pet projects to please their constituents to secure their re-election. I’ve made the decision that the risks associated with indoor tanning outweigh the benefits for me personally, and I know that other individuals may come to a different conclusion in their cost-benefit analysis. As a libertarian, I disagree that it should be the role of government to tell individuals how to behave.

Filed under: Health Care, Nanny State, Taxes
Comments: 9 Comments


  1. Christine,

    You say that “I’ve made the decision that the risks associated with indoor tanning outweigh the benefits for me personally.”

    Please show your work. Which actuarial tables did you use? Did you run a double-blind test? Did you discount the costs of developing cancer later in life because living past the age of 70 is less fun than being 35? Did you conduct a longitudinal study with a representative sample? If you did not do any of these things, how can you have any confidence at all in your estimate of the risks of tanning?

    Are you suggesting that we evaluate the health effects of tanning based on the aggregate decisions of tanning consumers?

    Comment by David C. Miller — 2010-03-27 @ 1:11 pm

  2. David Miller,

    The point you’re missing here is not how she came to that conclusion, but that she is free to do so using whatever methodology she chooses. The question isn’t whether she uses double blind studies or throws oracle bones into a chalk circle while chanting Vedic prayers, but whether she should be free to employ whatever means she chooses to arrive at her decision, no matter how irrational.

    Comment by Brian McCall — 2010-03-28 @ 3:15 pm

  3. Brian,

    I may be missing the point, but be patient with me. I was under the impression that this ‘freedom to tan’ was a means to an end. Christine in this post (and Eric D. Dixon in his recent post make the claim that individual consumers have access to better information than an outside architect can ever have. As a result, if individuals have the freedom to use their own information without outside interference, Good Things Will Happen.

    At least, that’s what I think Christine means when she writes:

    Moreover, these selective sales taxes assume that the government/”choice architect” actually knows what the “right” choice is for other individuals. Whether something is healthy is subjective; it depends on who you ask and when.

    However, if Christine’s information about tanning is less accurate than that of the “choice architect”, then Bad Things Happen. That’s why I think it’s important to understand how Christine generates her tanning information.

    Comment by David C. Miller — 2010-03-29 @ 11:31 am

  4. Everybody acts with limited information. “Experts” of varying stripes may have better information about health risks and costs, although when those experts are part of a regulatory system, the information they possess is often tainted by politically distorting factors.

    Those experts can’t have better information about the preferences and levels of risk tolerance of the people they may wish to subjugate than do the people in question.

    Comment by Eric D. Dixon — 2010-03-30 @ 2:24 am

  5. “Whether something is healthy is subjective; it depends on who you ask and when.”

    I take issue with this statement, which seems like the foundation for a lot of the analysis. If we can agree upon a definition of health (as an end), then it seems to me that there MUST be better and worse ways of pursuing that end. Those who disagree with the mainstream prescriptions of medical professionals don’t think that all beliefs are equally correct, but rather that their prescriptions (e.g., higher fat/lower carb) are more effective.

    As Eric said, “‘Experts’ of varying stripes may have better information about health risks and costs.”

    If you have good reason to believe that your doctor is giving you bad advice, then, by all means, take your business elsewhere. But if you really thought your own advice was just as good (i.e., health is “subjective”), why even seek expert medical advice?

    There is a difference between suggesting that information is dispersed and suggesting it is equally distributed among individuals.

    Comment by Andrew Hanson — 2010-03-30 @ 6:16 pm

  6. There are multiple types of information, and it’s all unequally distributed.

    The type of information that experts may possess in more abundance is only one variable in the utility equation. Determining how heavily to weight it in comparison to other variables requires another type of information that is unequally distributed, this time held in vastly larger measure by individual people pursuing their own preferences.

    Comment by Eric D. Dixon — 2010-03-30 @ 6:23 pm

  7. […] then it can continue to generate revenue from them. I consider this to be further evidence that the primary purpose of new taxes to raise more tax revenue to support the government’s spending ha…. Just like the indoor tanning tax, selective taxes on sodas and fatty food would be a revenue […]

    Pingback by The Lesson Applied » Inefficaciousness: Hot New Trend? — 2010-03-30 @ 10:53 pm

  8. The problem with information that experts possess is that it is often incomplete or wrong. Tanning may increase the risk of skin cancers – that is the current teaching. However, the hidden problem with the tanning prohibition (and this includes the current teaching that you should avoid sun during the hottest part of the day) is that sun exposure does more that just change the melanin content in your skin and increase your risk of skin cancer. It is also useful in the production of Vitamin D. There is emerging evidence that a large proportion of women in the U.S. are Vitamin D deficient, which increases their risks of osteoporosis, breast cancer, and perhaps other cancers. So…by avoiding sun exposure or tanning, you made trade the risk of a very curable cancer (skin cancer) for a debilitating disease (osteoporosis) or a more lethal cancer (breast cancer).
    As Hazlitt so aptly says, you must look for not only the easily seen effects of a policy, but also the less obvious but equally important unseen effects.

    Comment by Bill H — 2010-03-31 @ 10:06 pm

  9. As another unseen effect à la Hazlitt and Bastiat, people will switch to selective goods that are not subject to selective taxes. When you tax something, you get less of it, after all, and this is one reason why. In the context of soft drinks, they can switch to beverages such as gatorade or sugary juice drinks. In the context of indoor tanning, people can switch to vitamin D pills, calcium supplements, and weight-bearing exercise. (By no means am I an expert, and by no means do I have perfect information, but that is what I do to reduce my risk of developing osteoporosis and breast cancer without increasing my risk of developing melanoma.)

    Comment by Christine Harbin — 2010-04-01 @ 9:02 am

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Henry Hazlitt"[T]he whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence. The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups."
Henry Hazlitt, Economics in One Lesson






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