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Obesity and Hyperbolic Discounting: An Experimental Analysis

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  • Richards, Timothy J.
  • Hamilton, Stephen F.
  • Pofahl, Geoffrey M.

Abstract

Behavioral economists maintain that addictions such as alcoholism, smoking and over-eating represent examples of present-bias in decision making that is fundamentally irrational. In this article, we develop a model of present bias and apparently hyperbolic discounting that is fully consistent with rational behavior. We construct an experiment to test our hypothesis and to determine whether discount rates differ for individuals who engage in behaviors that could endanger their health. Our results show that discount functions are quasi-hyperbolic in shape, and that obesity and drinking are positively related to the discount rate. Anti-obesity policy, therefore, would be best directed to informing individuals as to the long-term implications of short-term gratification, rather than taxing foods directly.

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Bibliographic Info

Paper provided by Agricultural and Applied Economics Association in its series 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado with number 61186.

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Date of creation: Jan 2010
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Handle: RePEc:ags:aaea10:61186

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Keywords: addiction; discounting; experiments; hyperbolic; obesity; time-inconsistency.; Consumer/Household Economics; Food Consumption/Nutrition/Food Safety; Health Economics and Policy; Institutional and Behavioral Economics; C91; D12; D91; I18.;

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