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Optimal Paternalism: Sin Taxes and Health Subsidies

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Author Info

  • Aronsson, Thomas

    ()
    (Department of Economics, Umeå University)

  • Thunström, Linda

    ()
    (Department of Economics, Umeå University)

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    Abstract

    The starting point for this paper is the potential self-control problem underlying the consumption of unhealthy food. The purpose is to analyze public policies, which are designed to correct for the welfare loss associated with such behavior. Contrary to previous studies, our analysis suggests that subsidies on wealth and health capital are part of the policy package, which can be used to implement a socially optimal resource allocation.

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    File URL: http://www.econ.umu.se/DownloadAsset.action?contentId=52716&languageId=3&assetKey=ues662
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    Bibliographic Info

    Paper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 662.

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    Length: 15 pages
    Date of creation: 11 May 2005
    Date of revision:
    Handle: RePEc:hhs:umnees:0662

    Contact details of provider:
    Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden
    Phone: 090 - 786 61 42
    Fax: 090 - 77 23 02
    Email:
    Web page: http://www.econ.umu.se/
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    Related research

    Keywords: Health; Quasi-Hyperbolic Discounting; Taxes; Subsidies;

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    References

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    1. O'Donoghue, Ted & Rabin, Matthew, 1997. "Doing It Now or Later," Department of Economics, Working Paper Series qt7t44m5b0, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    2. Laibson, David, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 443-77, May.
    3. David I. Laibson, 1996. "Hyperbolic Discount Functions, Undersaving, and Savings Policy," NBER Working Papers 5635, National Bureau of Economic Research, Inc.
    4. Jonathan Gruber & Botond Koszegi, 2002. "A Theory of Government Regulation of Addictive Bads: Optimal Tax Levels and Tax Incidence for Cigarette Excise Taxation," NBER Working Papers 8777, National Bureau of Economic Research, Inc.
    5. Fischer, Carolyn, 1999. "Read This Paper Even Later: Procrastination with Time-Inconsistent Preferences," Discussion Papers dp-99-20, Resources For the Future.
    6. Jonathan Gruber & Botond Köszegi, 2001. "Is Addiction "Rational"? Theory And Evidence," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1261-1303, November.
    7. Ted O'Donoghue & Matthew Rabin, 2003. "Studying Optimal Paternalism, Illustrated by a Model of Sin Taxes," American Economic Review, American Economic Association, vol. 93(2), pages 186-191, May.
    8. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 675-700, August.
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    Citations

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    Cited by:
    1. Jukka Pirttilä & Sanna Tenhunen, 2005. "Pawns and Queens Revisited: Public Provision of Private Goods when Individuals make Mistakes," CESifo Working Paper Series 1466, CESifo Group Munich.
    2. Smed, Sinne & Jensen, Jorgen D. & Denver, Sigrid, 2007. "Socio-economic characteristics and the effect of taxation as a health policy instrument," Food Policy, Elsevier, vol. 32(5-6), pages 624-639.

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