2011
DOI: 10.1016/j.euroecorev.2010.06.002
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The political economy of sin taxes

Abstract: We analyse the determination of taxes on harmful goods when consumers have selfcontrol problems. We show that under mild conditions, the socially optimal tax rate exceeds the average distortion caused by self-control problems. Further, we show that in most cases the tax rate chosen in political equilibrium is below the socially optimal level. JEL Classification: H21, H30, D72.

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Cited by 47 publications
(31 citation statements)
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“…Thus, beyond fairness considerations, such interventions should not be ruled out a priori, and all costs and benefits should be considered (Philipson and Posner, ). Finally, a further concern for the policy maker could be the regressivity of both taxes, which is exacerbated by the fact that cigarettes and junk food are disproportionally consumed by poor individuals (Philipson and Posner, ; Gospodinov and Irvine, ; Haavio and Kotakorpi, ). As some studies show that obesity is positively correlated with inequality, fat taxes or tobacco excises might exacerbate inequality (Pickett et al , ; Elston et al , ).…”
Section: Resultsmentioning
confidence: 99%
“…Thus, beyond fairness considerations, such interventions should not be ruled out a priori, and all costs and benefits should be considered (Philipson and Posner, ). Finally, a further concern for the policy maker could be the regressivity of both taxes, which is exacerbated by the fact that cigarettes and junk food are disproportionally consumed by poor individuals (Philipson and Posner, ; Gospodinov and Irvine, ; Haavio and Kotakorpi, ). As some studies show that obesity is positively correlated with inequality, fat taxes or tobacco excises might exacerbate inequality (Pickett et al , ; Elston et al , ).…”
Section: Resultsmentioning
confidence: 99%
“…Kontrole i visoko porezno opterećenje u slučaju proizvodnje i distribucije alkohola i duhanskih proizvoda opravdani su postojanjem neizravnih društvenih troškova (Haavio i Kotakorpi, 2010). Individualna korist sastoji se od osjećaja zadovoljstva zbog konzumacije, dok su individualni troškovi vezani uz manju razinu kvalitete života, potencijalne bolesti, izdatke za liječenje i troškove osiguranja.…”
Section: Pregled Literatureunclassified
“…5 Papers with similar findings include Gruber and Kőszegi (2004), Haavio and Kotakorpi (2011). 6 Bernheim and Rangel (2004) also consider a somewhat similar setting when studying addiction and cue-triggered decision making, which is not hyperbolic discounting but still deviates from time consistent preferences.…”
Section: Introductionmentioning
confidence: 99%