Junk-food consumption, health and productivity are analyzed within an expectedlifetime- utility-maximizing framework in which the probability of living and productivity rise with health and health deteriorate with the consumption of junkfood. So long that the junk food’s relative taste-price differential is positive, the rational diet deviates from the physiologically optimal and renders the levels of health and productivity lower than the maximal. Taxing junk-food can eliminate this discrepancy but the outcome is not Pareto-superior. The value of health and the stationary junk-food consumption and health depend on the relative taste-price differential, survival and satisfaction elasticities and time preference-rate.
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Paper provided by School of Economics, University of Wollongong, NSW, Australia in its series Economics Working Papers with number
wp06-22.
Find related papers by JEL classification: I12 - Health, Education, and Welfare - - Health - - - Health Production D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
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