Australia: the healthiest country by 2020
National Preventative Health Strategy – the roadmap for action
6.1 - Influencing markets
- Chair's Foreword
Chapter 1: Building preventative health in Australian communities
1 - Vision, purpose and call to action- 2 - Australia’s response to the call to action
- 3 - The need for action
- 4 - What we know: prevention works
- 5 - Taking action
- 6 - A conceptual framework for the Strategy
- 7 - The roadmap for prevention
- 8 - Ensuring effective implementation
- 9 - Conclusion – a call to action
- References
- Chapter 2: Obesity in Australia: A need for urgent action
- Chapter 3: Tobacco: Towards world’s best practice in tobacco control
- Chapter 4: Alcohol: Reshaping the drinking culture in Australia
- Appendices
Food, physical activity, alcohol and tobacco are all consumables trading in our market system. When markets work efficiently, and consumers and producers act with full information, markets contribute significantly to community wellbeing. However, markets are imperfect and do not always produce optimal outcomes from a societal point of view.
For example, markets often under-provide the information consumers need in order to make healthy choices. When individuals have imperfect information about their own health, the range of choices available to them and the expected impact of particular lifestyle choices on their health, they may fail to act in the best interests of themselves or society.
Understanding how to adopt a healthy lifestyle is compromised by the complexity of the relationship between lifestyle behaviours and health, and an economic and social environment that promotes unhealthy choices. Efficient markets rely on a rational consumer able to critically evaluate information and weigh up, for instance, current pleasure and possible consequences. Alcohol, food and smoking are particularly vulnerable to compulsive choices and alcohol and tobacco can be addictive; in addition, alcohol directly affects capacity for rational decision making. Children and teenagers require special consideration, given their under-developed abilities to weigh the consequences of their behaviour.
Externalities, when the costs or benefits from actions impact on others, are another example of an imperfect market impacting on public health. The effects of smoking or excessive alcohol consumption extend beyond the individual, to impact on family members and the wider community.
Where imperfect information, the absence of rational decision making and negative externalities exist, there is a strong case for corrective action to be taken.
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The Taskforce has considered the economic arguments with regard to these issues carefully and systematically, and has taken account of research evidence regarding the relative influence of market, government and individual actions on behaviours that have demonstrated adverse health outcomes. Further, it has considered the weight of views and arguments presented in the submissions and received from the community and in consultative forums.
Based on the above, it is the Taskforce’s view that there are areas in which an imperfect market does in fact exist and which warrant corrective action – largely but not only through government action – if desired improvements in health are to be achieved. These areas are those identified as most clearly distorting consumption; for example, any form of marketing in the case of tobacco, and in the case of alcohol and obesity, marketing promotions aimed at children or adolescents that portray unhealthy choices as socially desirable.
However, in recommending measures that impose constraints on marketplace activity, it is the intention wherever possible to find ways in which both the private and social good can be served by shifting consumption in particular markets from less healthy to more healthy consumption patterns (see responsive regulation below).