Sugar: The Bitter Truth

    Research Assignment: How Healthy is Sugar? Do we need to cut out sugar (refined) completely from our diet to be healthy? Your take-home project has to follow the following report format:     https://www.youtube.com/watch?v=dBnniua6-oM Sugar: The Bitter Truth Robert H. Lustig, MD, UCSF Professor of Pediatrics in the Division of Endocrinology, explores the damage caused by sugary foods. He argues that fructose (too much) and fiber (not enough) appear to be cornerstones of the obesity epidemic through their effects on insulin. https://www.youtube.com/watch?v=nxyxcTZccsE Is a Calorie a Calorie? Processed Food, Experiment Gone Wrong Is a Calorie a Calorie? We’ve all heard the dictate that a calorie is a calorie regardless of its source. But are all foods truly created equal in terms of how they affect our health and weight? Given the barrage of competing information directed at us every day, what do we really know about healthy eating? https://www.youtube.com/watch?v=K3ksKkCOgTw The Secrets of Sugar We’ve heard for years about the dangers of eating too much fat or salt. But there have never been recommended limits for sugar on Canadian food labels, despite emerging research that suggests the sweet stuff may be making more of us fat and sick. In the fifth estate’s season premiere, Gillian Findlay digs into the surprising science — and the reaction from the food industry — to reveal The Secrets of Sugar. Has the sugar industry been hiding an unsavoury truth from consumers? A small but influential group of medical researchers is stirring up the health debate, linking sugar not just to rising obesity rates but also to a host of diseases including cancer, heart disease and Alzheimer’s. We put a family of four on a healthy diet to try to beat their sugar habit and track the surprising results. We talk to leading scientists – and their critics. And we ask the food industry why those ingredient labels are far from clear when it comes to how much sugar is really on your plate.     50   Conceptual Readings: 1. Theory and Practice in Policy Analysis, Chapter 1 – Most people have not spent much time thinking about the approach or perspective we ought to use when making important decisions. A major goal of this class is to teach the perspective and tools of a "policy analyst". This first chapter serves as a bit of an introduction to some of the ideas of how that ought to work, which is actually still being debated. This chapter basically asks: what is the point of policy analysis? I would suggest that it is actually a more complicated question than it seems and there are different reasonable answers. I'm looking forward to hearing your thoughts. Questions to think about: What do you think of the different “models” of the ways that analysis contributes to the policy process? Any of them seem better/worse than others in your experience? If we are doing policy-relevant research/analysis, what should our goals be? Is policy analysis really different from science? Do you agree with the author throughout or do you take issue with his perspective anywhere? 2. Theory and Practice in Policy Analysis, Chapter 3 – Around the world, benefit-cost analysis is the primary decision-making criteria of governments and corporations. Doing a benefit-cost analysis is pretty conceptually simple (you may already have experience with BCA). But there are a lot of important assumptions that go into BCA, most of which are never even considered by those who actually carry it out. This chapter (and the next reading) basically dig into the ethics of BCA, including ways that it might be unfair. We already use this tool all the time to make important decisions, and these readings dig into what BCA can and can't tell us. Questions to think about: What is the issue with using prices to estimate benefits and what is the correct way of framing them? Should the value of (all) things be based on the number of people that use them? What are some issues with “willingness-to-pay” as a stand-in for economic value? What is the Pareto criterion and why is it almost impossible to meet? What is the Kaldor-Hicks criterion and what are some ethical issues with it? What are some of the practical/political issues with the way that BCA is applied? What do you think about the Precautionary Principle as an alternative to BCA? In the end, is BCA a useful tool? 3. Lave "Benefit-Cost Analysis: Do the Benefits Exceed the Costs?" –BCA is an extremely common tool that has generally been adopted as the primary decision criteria in most policy analysis circles. Lave here is pushing back against the dominance of that culture, attempting to illustrate that BCA is not a perfect tool and attempting to specifically point out ways that it doesn’t reflect our values. What is Lester Lave’s real argument here? Is it an argument against benefit-cost analysis (BCA) or something more subtle? What is utilitarianism and how does this essay relate to it? What are the weaknesses of BCA? When should we use BCA (on what type of problems)? How should we interpret the output of a BCA? 4. Theory and Practice in Policy Analysis, Chapter 7 – Financial discounting is a common tool used in accounting to understand the time-value of money. We come across it any time we have to pay interest on a loan or make decisions between different types of investments. Just like some of the other topics in this class, this relatively simple and commonly-used tool has some hidden assumptions. While standard discounting works pretty well to help us make investment decisions, it is unclear if we can apply it to other topics like lives or what kind of a society to leave to our children. Some people argue that standard discounting is the right approach for almost any problem, but others argue that it leads to all sorts of outcomes that many people would find unethical. Questions to think about: In what situations is simple financial discounting appropriate? Is a “real options” perspective better? In what ways? Are discount rates constant? Should we use the same discount rate for different decisions, or are there situation-specific rates? Are things more remote spatially similar to those that are more remote temporally: does a “spatial discount rate” make sense? In general, what do you think of the applicability of discounting concepts? Practical Reading: 1. Herbohn and Harrison “Introduction to Discounted Cash Flow Analysis and Financial Functions in Excel” – This reading is a short and simple explanation of how net present value (discounting) calculation work and how to set them up in excel. This reading is technically optional, but will be useful for the homework assignment below. Week 1 Assignment (due 27 February) Question 1 (40 points), write a high-quality essay, approximately 1 single spaced page: The four conceptual readings in the first week describe a rational, analytical approach to evaluating decisions, policies, or other changes, usually in terms of monetary value (there are different tools and methods discussed, but they all fall under a perspective that is rational, quantitative, and based on the idea of utility maximization). In this first essay, write a short essay describing what you see as the strengths and weaknesses of this analytical perspective. This may include theoretical elements (like how ethical the approach is) or practical elements (like whether the approach can be applied to real-life questions). Please reference the readings and any outside sources you want in this essay. If you aren’t sure what to write about, here are some questions to consider (but are not required in the essay): Is this analytical perspective better than a purely political process for making decisions? How can this perspective be brought into government decision making? In your view, are these types of analysis worth doing? Are they always worth doing, or are there certain topics where they make the most sense? Are there situations where we don't want or need these tools to help us make decisions? In the end, governments and organizations need to make decisions and take action - how should we make those decisions? Question 2 (20 points), only need to answer the questions, short sentences are fine: Consider a risk-free investment that costs $10,000 in year 0 and pays back 3 payments of $4,000 in years 1,2, and 3. a. What are the net benefits of the investment in direct (not discounted) terms? b. What are the discounted net benefits if my discount rate is 5%? c. What are the discounted net benefits if my discount rate is 25%? Question 3 (40 points), only need to answer the question, can be tables copied from excel and a few sentences: I want you to practice setting up a discounted cash flow and calculating NPV in excel. For this, I want you to estimate and compare the net present cost of a hybrid car (Toyota Prius C) and a similar regular car (Toyota Yaris). These are both small cars targeted at the economy buyer, but the Prius C costs more. However, of course, it saves fuel and might be a better option in the long run. For this problem, use these values for your base-case analysis (assume all costs are in real dollars and are constant over time): Parameter Value Prius C cost $19,500 Yaris cost $14,800 Gasoline cost $2.50 / gal Prius C fuel efficiency 49 MPG Yaris fuel efficiency 33 MPG Annual mileage 12,000 miles Lifetime of car 15 years Discount rate 7% For this analysis, you can disregard other factors (like maintenance costs or taxes) and just assume that the only costs are the upfront cost of the car and the fuel cost. For simplicity, assume you will just pay cash for the car and that you will drive it for 15 years, after which it will have no salvage value at all. Assume that the car is purchased in "year 0" and that the fuel expenses occur between "year 1" and "year 15". On this question, you can just paste your excel tables in as an answer, with short sentences where needed (ie, a carefully written report is NOT required). a. For the Prius C, set up the (not discounted) cash flow for years 0 to 15 in one column. In the next column, apply discounting to the cost of ownership in each year (0 through 15), showing the discounted cash flow. Then sum it up to get the net present cost (NPC) of buying and operating the vehicle for 15 years. b. Next, do the same thing for the Yaris in the next few columns. Remember, good practice is to label your columns carefully (it helps you to remember exactly what each thing is). c. In another cell on your sheet, take the difference between the two NPC values from above. Which is cheaper and by how much? d. Now do a little sensitivity analysis. Which is the better choice (and by how much) if a consumer's discount rate is 25%? At what gas price do the two options have the same NPC? If you set up your excel model correctly (with inputs typed in their own section and the main model referencing those cells), these should be easy to determine.