Big Mac Subsidy?
|February 22nd, 2023|
by some estimates, a Big Mac would cost $13 without subsidies and a pound of ground meat would cost $30.
This seemed much too high to me: I know we subsidize meat heavily, but that's a much bigger ratio than I remembered seeing. Clicking through to the source, and 2022 AEIR (angle: anti-subsidy) blog post I see:
Research from 2015 shows this subsidization reduces the price of Big Macs from $13 to $5 and the price of a pound of hamburger meat from $30 to the $5 we see today.
Clicking through to their source, a 2015 Berkeley Entrepreneurship & Technology Technical Report (angle: anti-climate change) I see:
The U.S government spends $38 billion each year to subsidize the meat and dairy industries, but only 0.04 percent of that (i.e., $17 million) each year to subsidize fruits and vegetables. A $5 Big Mac would cost $13 if the retail price included hidden expenses that meat producers offload onto society. A pound of hamburger will cost $30 without any government subsidies.
This is uncited, and not at all plausible. In 2013 a Big Mac cost $4.56, so they're claiming $8.44/burger. There are about 550M Big Macs sold annually, so the total Big Mac subsidy would be $4.6B. That's 12% of the entire $38B. And Big Macs are only 0.4% of US beef consumption (25.5B lb of beef, 1/5lb each, 550M/y) let alone all the other subsidized foods.
I did a bit more looking and found David Simon claiming in his 2013 book Meatonomics that the retail price of a big mac would be $12. This is close enough that it might be the source of the claim. He breaks it down as:
$0.38 for cruelty. A total of $20.7 billion in cruelty costs is imposed on Americans each year. (Extrapolated from a study in which auction participants bid to end cruel farming practices.)
$0.67 in environmental losses. This is a small piece of the $37.2 billion in annual environmental costs related to U.S. animal food production each year. The figure includes the costs of soil erosion, climate change, damage from pesticides and fertilizers, devaluation of real property, and manure remediation.
$0.70 in subsidies. Toss in a few coins from the $38.4 billion in government subsidies that American taxpayers pay to fund the meat and dairy industries each year.
$5.69 in health care costs. The biggest slice of the pie is a chunk of the $314 billion in health care costs incurred by Americans each year to treat those cases of cancer, diabetes heart disease, and food poisoning related to meat and dairy consumption.
Now, health care costs are not what I'd normally consider a subsidy, and Simon doesn't claim it is one. But it also looks like each of these national numbers was converted into a per-Big Mac number by assuming Big Macs are responsible for 1% of the total:
- 550M / ($20.7B / $0.38) = 1%
- 550M / ($37.2B / $0.67) = 1%
- 550M / ($38.4B / $0.70) = 1%
- 550M / ($314B / $5.69) = 1%
While 1% is not as implausible as 12%, that's still oddly high. If we look just at the health claim, I don't know where they're getting $314B but I see Springmann 2018 claiming $71B for red meat. This would make Big Macs responsible for 6.5% of the total health impact of red meat despite being only 0.4% of beef consumption (see above).
In short, this statistic is junk.
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