Junk-food consumption, health and productivity are analysed within an expectedlifetime- utility-maximising framework in which longevity and productivity rise with health, and health deteriorates with the consumption of junk food. As long as the junk food’s relative taste-price differential is positive, rational diets deviate from the physiologically optimal ones and generate lower than maximal levels of health and productivity. Taxing junk food can eliminate this discrepancy, but the outcome is not Pareto-superior. The value of health and the steady-state levels of rational junk-food consumption, health and productivity depend on the consumer’s tastes, prices, endurance, appetite and time preferences.
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Paper provided by School of Economics, University of Wollongong, NSW, Australia in its series Economics Working Papers with number
wp07-01.
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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Ted O'Donoghue & Matthew Rabin, 1999.
"Doing It Now or Later,"
American Economic Review,
American Economic Association, vol. 89(1), pages 103-124, March.
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