Banning junk-food deals could help reduce obesity’s economic burden across the UK

The UK’s obesity crisis imposes large external costs on the public sector—ballooning NHS expenditure, lost productivity and comorbidities—yet many individual consumers ignore these negative consumption externalities when choosing ultra-processed foods. Market failure is evident: private demand fails to reflect societal harm. Hence government intervention via advertising bans, price controls or outright bans on “buy-one-get-one” deals can be justified to internalise those externalities. While regulators risk government failure, carefully designed policies could yield net welfare gains by aligning private choices with social optimum.

'Buy one, get one free' deals for unhealthy food banned in supermarkets - BBC News

1. Using evidence from the article, explain what is meant by a negative consumption externality.

2. Using an MSB/MSC diagram, analyse how government regulation of junk food promotions, such as banning multi-buy deals and advertising, could help correct market failure caused by obesity.

3. Discuss the extent to which government regulations to reduce obesity is likely to be successful in improving economic welfare.