(Warning: this editorial contains large doses of sarcasm and anti-paternalism that may exceed recommended nanny state allowances.)

With that out of the way, the US Federal Government recently announced plans to make nutritional food labelling mandatory in restaurants, grocery stores, and at vending machines.

The aim behind the plan is to tackle rising obesity rates on the assumption that there is an information market failure at the root of this health crisis. The government’s fix is to provide that information, allowing people to make an informed choice.

This measure fits with nudge theory, which argues that you can get individuals to make better choices through positive reinforcement, indirect suggestion, and incentives. But it is hard to see the velvet nudge for the iron fist of the state.

Federal guidelines (running at over 500 pages) dictate everything from font size and placement of the information, but offer very little clarity on why fresh sandwiches are exempt but pre-prepared ones are not. Fines for non-compliance run as high as US$10,000 or three years in prison.

The government estimates it will cost each business between US$49,000 and US$77,000 in the first year, while food service industry estimates exceed US$120,000. Either way it adds billions in cost to an industry predominantly made up of small businesses running on thin margins.

These costs need to be weighed against the benefits of the programme. This is problematic too. Obesity is a multi-factor problem, not just an information asymmetry. It may indeed have some effect at the margin, but the government’s case is unclear whether this justifies the impact on businesses and the limits on consumer choice.

Cato’s Ike Brannon and Sam Batkins point out that if diners valued information, they would eat at restaurants that provided it, and yet there is a dearth of these establishments. To quote Brannon and Batkins: “It is unclear why the administration believes the lack of information is a market failure and not simply an example of a market failing to develop for something no one particularly values.”

Based on the eagerness with which nanny state-types here have embraced sugar taxes, it is only a matter of time until we hear calls for a similar measure in New Zealand. It is enough to put you off your food.