Obesity and Smoking: can we Kill Two Birds with one Tax?

Dragone, Davide; Manaresi, Francesco; Savorelli, Luca

doi:10.1002/hec.3231

Cited by 15 publications

(8 citation statements)

References 63 publications

(114 reference statements)

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“…For example, the interaction of smoking and other forms of unhealthy behavior like overeating (Dragone et al, 2015) could be analyzed in the context of endogenous health and longevity, gender differences in addiction and health deficit accumulation could be explored (Schuenemann et al, 2017b), and the model could be augmented by feedback effects of addiction on preferences and character traits like time discounting (Bretteville-Jensen, 1999).…”

Section: Resultsmentioning

confidence: 99%

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Smoking Kills: An Economic Theory of Addiction, Health Deficit Accumulation, and Longevity

Strulik

2017

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract. In this paper I unify the economic theories of addiction and health deficit accumulation and develop a life cycle theory in which individuals take into account the fact that the consumption of addictive goods reduces their health and longevity. Terms of use: Documents in EconStor mayI distinguish two types of addiction: perfect and common. Individuals with perfect addiction perfectly control their addiction. Individuals with common addiction, though otherwise rational and forward looking, fail to fully understand how their addiction develops. I argue that the life cycle consumption pattern predicted for common addiction is more suitable for motivating empirically observable patterns of addictive goods consumption. I take the case of smoking as unhealthy behavior, calibrate the model with U.S. data, and apply it in order to investigate the life cycle patterns of smoking and quitting smoking and the socioeconomic gradients of unhealthy consumption and longevity.

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Section: Resultsmentioning

confidence: 99%

“…Dockner and Feichtinger, 1993;Gavrila et al, 2005;Dragone et al, 2015) and tried to tests its implications (e.g. Chaloupka, 1991;Baltagi and Griffin, 2001).…”

mentioning

confidence: 99%

Smoking Kills: An Economic Theory of Addiction, Health Deficit Accumulation, and Longevity

Strulik

2017

SSRN Journal

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“…Our study puts emphasis on the undesirable effects that may arise when introducing sin taxes. It is in this sense, similar in spirit to the studies of Yaniv et al (2009) and Dragone et al (2016). The former considers a situation where consumers can directly consume a fat good or buy a healthy good that entails an additional time cost to be consumed.…”

Section: Introductionmentioning

confidence: 92%

“…(2009) and Dragone et al. (2016). The former considers a situation where consumers can directly consume a fat good or buy a healthy good that entails an additional time cost to be consumed.…”

Section: Introductionmentioning

confidence: 96%

Optimal design of sin taxes in the presence of nontaxable sin goods

Arnabal

2021

Health Economics

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Sin good consumption entails health damage, which is in general not fully perceived by individuals, what results in its overconsumption. One way to tackle this problem is to tax these unhealthy goods. However, not all the individual choices that affect health status can be easily observed and effectively taxed by the government. This paper considers a setting where individuals can consume two types of sin goods that differ in their observability (taxability) by the government. As a benchmark, the first-best taxes for the observable and non-observable sin good are derived, considering homogeneous individuals. In the second-best setting, where observability on sin good consumption is limited, the rule for the taxable sin good is shown to depend on the degree of complementarity or substitutability with the unobservable sin good. Finally, redistributional considerations are incorporated by extending the analysis to a setting where individuals differ in their wealth and in their degree of misperception of the health damage caused by sin good consumption. Policy implications are illustrated considering physical inactivity and illicit drugs as examples of non-taxable sin goods, while alcohol, tobacco, fat and sugar account for the taxable sin goodsillicit drugs, optimal taxation, physical inactivity, sin goods, taxability | INTRODUCTIONOne of the biggest health concerns today is that individuals engage in too much risky health behaviors. Sin good consumption and physical inactivity are the main reasons that account for the increasing risks of dying from a noncommunicable disease, which according to the World Health Organization (WHO) kill 41 million people every year. 1 Sin goods such as tobacco, alcohol, fat or sugar have been the target of different public policies aiming to discourage its consumption. These policies are justified by the fact that individuals fail to fully acknowledge the consequences caused by their sin good consumption, both to themselves and to the rest of the society through an increase in health care costs. One important measure to mitigate this overconsumption problem has been to increase their price through the so called sin taxes.While taxes have proven to be an effective tool to reduce tobacco, alcohol and sugary beverage consumption (Chaloupka et al., 2019), they are criticized for being regressive (e.g., Allais et al., 2010;Gruber & Kőszegi, 2004), as well as by the fact that they may induce consumers to substitute its consumption towards relative less taxed harmful goods. 2

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“…For instance, using a first difference model French et al (2010) find that increasing frequency and intensity of alcohol use is associated with statistically significant yet quantitatively small weight gain. One explanation for this result lies in the existing complementarities between health behaviours (Dragone et al 2016). Drinking has been typically shown to complement smoking behaviour Dee (1999), Picone et al (2004), Yörük & Yörük (2011, Crost & Guerrero (2012), Pieroni, Lanari & Salmasi (2013), Businelle et al (2013), Picone & Sloan (2003.…”

Section: Substitution and Complementarity Of Health Behavioursmentioning

confidence: 99%