IDEAS home Printed from https://ideas.repec.org/p/sef/csefwp/536.html
   My bibliography  Save this paper

Education, Taxation and the Perceived Effects of Sin Good Consumption

Author

Abstract

In a setting in which an agent has a behavioral bias that causes an underestimation or an overestimation of the health consequences of sin goods consumption, the paper studies how a social planner can affect the demand of such goods through education initiatives and/or taxation. When only optimistic consumers are present, depending on the elasticity of demand of the sin good with respect to taxation and the relative efficiency of educational measures, the two instruments can be used as substitutes or complements. When both optimistic and pessimistic consumers coexist, the correcting effect that taxation has on optimistic consumers has unintended distorting effects on pessimistic ones. In this framework, educational measures, by aligning both consumers' perceptions closer to the true probability of health damages, are more effective than taxation.

Suggested Citation

  • Annamaria Menichini & Giovanni Immordino & Maria Grazia Romano, 2019. "Education, Taxation and the Perceived Effects of Sin Good Consumption," CSEF Working Papers 536, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  • Handle: RePEc:sef:csefwp:536
    as

    Download full text from publisher

    File URL: http://www.csef.it/WP/wp536.pdf
    Download Restriction: no

    More about this item

    Keywords

    Overoptimism; Taxation; Educational initiatives; Sin goods.;

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sef:csefwp:536. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lia Ambrosio). General contact details of provider: http://edirc.repec.org/data/cssalit.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.