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Corrective Taxation and Internalities from Food Consumption

Author

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  • Rachel Griffith
  • Martin O’Connell
  • Kate Smith

Abstract

Corrective taxes have been implemented in a number of countries with the aim of addressing growing concern about the rise in obesity- and diet-related diseases. The rationale is that food consumption imposes costs on the consumer in the future that they do not fully take into account at the point of consumption (‘internalities’). Corrective taxes have the potential to improve welfare by reducing suboptimally high consumption. We review the literature on the size of these internalities and on the optimal corrective tax, which depends on the patterns of internalities, the price responsiveness of consumers, and on redistributive aims.

Suggested Citation

  • Rachel Griffith & Martin O’Connell & Kate Smith, 2018. "Corrective Taxation and Internalities from Food Consumption," CESifo Economic Studies, CESifo Group, vol. 64(1), pages 1-14.
    • Handle: RePEc:oup:cesifo:v:64:y:2018:i:1:p:1-14.
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    File URL: http://hdl.handle.net/10.1093/cesifo/ifx018
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    References listed on IDEAS

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    Cited by:

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    2. Daniel John Zizzo & Melanie Parravano & Ryota Nakamura & Suzanna Forwood & Marc Suhrcke, 2021. "The impact of taxation and signposting on diet: an online field study with breakfast cereals and soft drinks," Experimental Economics, Springer;Economic Science Association, vol. 24(4), pages 1294-1324, December.
    3. Stéphane Gauthier & Fanny Henriet, 2023. "Targeting Taxes on Local Externalities," Annals of Economics and Statistics, GENES, issue 151, pages 1-36.
    4. Paul Calcott, 2022. "Regulating ingredients in sin goods," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(3), pages 1120-1139, May.
    5. Rosella Levaggi & Carmen Marchiori & Paolo M. Panteghini, 2022. "Lifestyle taxes in the presence of profit shifting," Journal of Economics, Springer, vol. 137(1), pages 81-96, September.
    6. Panzone, Luca A., 2022. "Conditional Promotion With A Costly Reward: An Evaluation Of A Campaign To Motivate Consumption Of Fruit And Vegetables," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322058, Agricultural and Applied Economics Association.
    7. Chan, Nathan W. & Globus-Harris, Isla, 2023. "On consumer incentives for energy-efficient durables," Journal of Environmental Economics and Management, Elsevier, vol. 119(C).
    8. Cherchye, Laurens & De Rock, Bram & Griffith, Rachel & O’Connell, Martin & Smith, Kate & Vermeulen, Frederic, 2020. "A new year, a new you? Within-individual variation in food purchases," European Economic Review, Elsevier, vol. 127(C).
    9. Franziska Funke & Linus Mattauch & Inge van den Bijgaart & H. Charles J. Godfray & Cameron Hepburn & David Klenert & Marco Springmann & Nicolas Treich, 2022. "Toward Optimal Meat Pricing: Is It Time to Tax Meat Consumption?," Review of Environmental Economics and Policy, University of Chicago Press, vol. 16(2), pages 219-240.
    10. Peter Lloyd & Donald MacLaren, 2019. "Should We Tax Sugar and If So How?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 52(1), pages 19-40, March.
    11. Rachel Griffith & Victoria Jenneson & Joseph James & Anna Taylor, 2021. "The impact of a tax on added sugar and salt," IFS Working Papers W21/21, Institute for Fiscal Studies.
    12. Andrew Fearne & Natalia Borzino & Beatrix De La Iglesia & Peter Moffatt & Margaret Robbins, 2022. "Using supermarket loyalty card data to measure the differential impact of the UK soft drink sugar tax on buyer behaviour," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(2), pages 321-337, June.
    13. Zarko Kalamov & Marco Runkel, 2018. "Paternalistic Taxation of Unhealthy Food and the Intensive versus Extensive Margin of Obesity," CESifo Working Paper Series 6911, CESifo.
    14. Valerio Serse, 2019. "Do Sugar Taxes affect the right consumers?," 2019 Papers pse633, Job Market Papers.

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    More about this item

    Keywords

    corrective taxes; internality;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • D9 - Microeconomics - - Micro-Based Behavioral Economics

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