The subsidies of up to 20% for hawkers to switch from palm oil to better quality vegetable oils aim to promote healthier food options for Singaporean who frequently have their meals at hawker center.
Based on simple economics theory that you have learnt in A Level Economics, the government classifies "healthier hawker food" as merit good, thus it will be under consume if leave this to the market forces! Subsidies will help hawkers reduce the cost of production and hopefully, this will translate into lower (or at least not increase) the prices. The questions remain: will the subsidies help to achieve the "social optimal" level of healthier hawker food? and is providing subsidies the best solution?
Singaporean may find the healthier options less tasty and still prefer the traditional method of cooking. Thus, hawkers may not switch to alternative ingredients. May be education might be more appropriate if the under consumption is due to imperfect information.
On the other hand, government might also wish that healthier food will help reduce future healthcare cost for both Singaporean and the government. So, lets eat healthy for the benefits of us and the future of our economy!
Based on simple economics theory that you have learnt in A Level Economics, the government classifies "healthier hawker food" as merit good, thus it will be under consume if leave this to the market forces! Subsidies will help hawkers reduce the cost of production and hopefully, this will translate into lower (or at least not increase) the prices. The questions remain: will the subsidies help to achieve the "social optimal" level of healthier hawker food? and is providing subsidies the best solution?
Singaporean may find the healthier options less tasty and still prefer the traditional method of cooking. Thus, hawkers may not switch to alternative ingredients. May be education might be more appropriate if the under consumption is due to imperfect information.
On the other hand, government might also wish that healthier food will help reduce future healthcare cost for both Singaporean and the government. So, lets eat healthy for the benefits of us and the future of our economy!
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