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Taxes on unhealthy food and externalities in the parental choice of children's diet

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  • Zarko Kalamov
  • Marco Runkel

Abstract

This study examines whether taxes on unhealthy food are suitable for internalizing intergenerational externalities inflicted by parents when they decide on their children's diet. In an overlapping generations (OLG) model with an imperfectly altruistic parent, the optimal steady‐state tax rate on unhealthy food is strictly positive. However, it is only second‐best because, in addition to reducing unhealthy consumption by the child, it distorts the parent's unhealthy consumption. Surprisingly, the optimal tax may underinternalize or overinternalize the marginal damage.

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  • Zarko Kalamov & Marco Runkel, 2020. "Taxes on unhealthy food and externalities in the parental choice of children's diet," Health Economics, John Wiley & Sons, Ltd., vol. 29(8), pages 938-944, August.
    • Handle: RePEc:wly:hlthec:v:29:y:2020:i:8:p:938-944
    DOI: 10.1002/hec.4024
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    Cited by:

    1. Moustapha Sarr, 2023. "Inciting Family Healthy Eating: Taxation and Nudging," EconomiX Working Papers 2023-13, University of Paris Nanterre, EconomiX.
    2. Thomas Eichner & Marco Runkel, 2022. "Non-Paternalistic Foundation of Sugar Taxation and Missing Markets for Sugar Content," CESifo Working Paper Series 9583, CESifo.
    3. S. Sajeesh & Ozgur M. Araz & Terry T.‐K. Huang, 2022. "Market positioning in food industry in response to public health policies," Production and Operations Management, Production and Operations Management Society, vol. 31(7), pages 2962-2981, July.

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    More about this item

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

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