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Junk Food, Health and Productivity: Taste, Price, Risk and Rationality

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.

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Length: 28 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:uow:depec1:wp06-22
Contact details of provider: Postal: School of Economics, University of Wollongong, Northfields Avenue, Wollongong NSW 2522 Australia
Phone: +612 4221-3659
Fax: +612 4221-3725
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  1. Bleichrodt, Han, 1995. "QALYs and HYEs: Under what conditions are they equivalent?," Journal of Health Economics, Elsevier, vol. 14(1), pages 17-37, May.
  2. Patricia M. Anderson & Kristin F. Butcher, 2005. "Reading, Writing and Raisinets: Are School Finances Contributing to Children's Obesity?," NBER Working Papers 11177, National Bureau of Economic Research, Inc.
  3. Bleichrodt, Han & Quiggin, John, 1999. "Life-cycle preferences over consumption and health: when is cost-effectiveness analysis equivalent to cost-benefit analysis?," Journal of Health Economics, Elsevier, vol. 18(6), pages 681-708, December.
  4. Hugo Mialon & Sue Mialon, 2005. "Sinful indulgences, soft substitutes, and self-control," Applied Economics Letters, Taylor & Francis Journals, vol. 12(12), pages 719-722.
  5. Levy, A., 2000. "A Lifetime Portfolio of Risky and Risk-Free Sexual Behaviour and the Prevalence of AIDS," Economics Working Papers wp01-04, School of Economics, University of Wollongong, NSW, Australia.
  6. Levy, Amnon, 2002. "Rational eating: can it lead to overweightness or underweightness?," Journal of Health Economics, Elsevier, vol. 21(5), pages 887-899, September.
  7. Karen E. Dynan, 2000. "Habit Formation in Consumer Preferences: Evidence from Panel Data," American Economic Review, American Economic Association, vol. 90(3), pages 391-406, June.
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