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Junk-food, home cooking, physical activity and obesity: The effect of the fat tax and the thin subsidy

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  • Yaniv, Gideon
  • Rosin, Odelia
  • Tobol, Yossef

Abstract

In an effort to reduce the growing prevalence of obesity, a tax on junk-foods, known as 'fat tax', has been proposed, the revenue from which could be used to finance a 'thin subsidy' for healthy foods or exercising equipment. The present paper addresses the fat tax and thin subsidy within a food-intake rational-choice model. Assuming that healthy meals are cooked at home with purchased ingredients and time input, the paper examines the effects on obesity of a tax on junk-food meals and a subsidy to cooking ingredients, distinguishing between a weight-conscious and a non-weight conscious individual, and between a weight-conscious individual who is physically active and physically inactive. The results show that for a non-weight conscious individual a fat tax will unambiguously reduce obesity, whereas a thin subsidy may increase obesity. However, for a weight-conscious individual, particularly one who is physically active, even a fat tax may increase obesity, as it may reduce not just the consumption of junk-food, but also the time devoted to physical activity. The paper explores conditions under which obesity will rise, fall, or remain intact following the introduction of a fat tax or a thin subsidy.

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  • Yaniv, Gideon & Rosin, Odelia & Tobol, Yossef, 2009. "Junk-food, home cooking, physical activity and obesity: The effect of the fat tax and the thin subsidy," Journal of Public Economics, Elsevier, vol. 93(5-6), pages 823-830, June.
  • Handle: RePEc:eee:pubeco:v:93:y:2009:i:5-6:p:823-830
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    Cited by:

    1. Amnon Levy, 2011. "Physiological, Gastronomic and Budgetary Aspects and the Diets of Perfectly and Imperfectly Lifetime-Rational Consumers," Economics Working Papers wp11-13, School of Economics, University of Wollongong, NSW, Australia.
    2. Cavaliere, Alessia & De Marchi, Elisa & Banterle, Alessandro, 2013. "Time Preference and Health: The Problem of Obesity," 2013 International European Forum, February 18-22, 2013, Innsbruck-Igls, Austria 164754, International European Forum on Innovation and System Dynamics in Food Networks.
    3. Dragone, Davide & Savorelli, Luca, 2012. "Thinness and obesity: A model of food consumption, health concerns, and social pressure," Journal of Health Economics, Elsevier, vol. 31(1), pages 243-256.
    4. Gilad Sorek, 2013. "Efficient Self-Protection and Progress in Curing-Technology," Auburn Economics Working Paper Series auwp2013-07, Department of Economics, Auburn University.
    5. Zhen Miao & John C. Beghin & Helen H. Jensen, 2013. "Accounting For Product Substitution In The Analysis Of Food Taxes Targeting Obesity," Health Economics, John Wiley & Sons, Ltd., vol. 22(11), pages 1318-1343, November.
    6. Cavaliere, Alessia & De Marchi, Elisa & Banterle, Alessandro, 2014. "Does Consumer Time Preference Affect Label Use?," 2014 International European Forum, February 17-21, 2014, Innsbruck-Igls, Austria 199401, International European Forum on Innovation and System Dynamics in Food Networks.
    7. Barbieri, Paolo Nicola, 2016. "Weight loss, obesity traps and policy policies," MPRA Paper 71327, University Library of Munich, Germany.
    8. Davide, Dragone & Francesco, Manaresi & Luca, Savorelli, 2013. "Obesity and smoking: can we catch two birds with one tax?," SIRE Discussion Papers 2013-31, Scottish Institute for Research in Economics (SIRE).
    9. Siniver Erez & Yaniv Gideon, 2012. "All-You-Can-Eat Buffet: Entry Price, the Fat Tax and Meal Cessation," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-21, April.
    10. M. Paula Fitzgerald & Cait Poynor Lamberton & Michael F. Walsh, 2016. "Will I Pay for Your Pleasure? Consumers’ Perceptions of Negative Externalities and Responses to Pigovian Taxes," Journal of the Association for Consumer Research, University of Chicago Press, vol. 1(3), pages 355-377.
    11. Cremer, Helmuth & Goulão, Catarina & Roeder, Kerstin, 2016. "Earmarking and the political support of fat taxes," Journal of Health Economics, Elsevier, vol. 50(C), pages 258-267.
    12. Chavas, Jean-Paul, 2013. "On the microeconomics of food and malnutrition under endogenous discounting," European Economic Review, Elsevier, vol. 59(C), pages 80-96.
    13. Bíró, Anikó, 2015. "Did the junk food tax make the Hungarians eat healthier?," Food Policy, Elsevier, vol. 54(C), pages 107-115.
    14. Kalamov, Zarko Y., 2016. "A Sales Tax Is Better at Promoting Healthy Diets than the Fat Tax and the Thin Subsidy," EconStor Preprints 148007, ZBW - German National Library of Economics.
    15. Liu, Yaqin & Ferreira, Susana & Colson, Gregory & Wetzstein, Michael, 2013. "Obesity and Counseling," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149947, Agricultural and Applied Economics Association.
    16. Banterle, Alessandro & Cavaliere, Alessia, 2014. "Is there a relationship between product attributes, nutrition labels and excess weight? Evidence from an Italian region," Food Policy, Elsevier, vol. 49(P1), pages 241-249.
    17. Kennedy Peter W, 2010. "Economic Incentives for a Healthy Diet: A Comparison of Policies in a Canadian Context," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-32, September.
    18. Zeng, Di & Thomsen, Michael R. & Nayga, Rodolfo M. Jr., 2015. "Food Desert and Weight Outcome: Disentangling Confounding Mechanisms," 2016 Allied Social Science Association (ASSA) Annual Meeting, January 3-5, 2016, San Francisco, California 212813, Agricultural and Applied Economics Association.
    19. Javier Rivas & Miguel Flores, 2011. "Cash Incentives and Unhealthy Food Consumption," Discussion Papers in Economics 11/47, Department of Economics, University of Leicester, revised Jan 2012.
    20. Mark Harrison & Alex Robson, 2011. "Prevention No Cure: A Critique of the Report of Australia's National Preventative Health Taskforce," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 18(2), pages 7-26.
    21. Georgios Kavetsos, 2011. "Physical Activity and Subjective Well-being: An Empirical Analysis," Chapters,in: The Economics of Sport, Health and Happiness, chapter 11 Edward Elgar Publishing.
    22. Yang, Muzhe & Huang, Rui, 2010. "Exposure to Obesity and Weight Gain among Adolescents," Research Reports 149944, University of Connecticut, Food Marketing Policy Center.
    23. Cheng, Chu-Chuan & Chu, Hsun, 2017. "Optimal Policies for Sin Goods and Health Care: Tax or Subsidy?," MPRA Paper 80183, University Library of Munich, Germany.
    24. Wang, Yang & Yang, Muzhe, 2013. "Crisis-induced depression, physical activity and dietary intake among young adults: Evidence from the 9/11 terrorist attacks," Economics & Human Biology, Elsevier, vol. 11(2), pages 206-220.

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