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

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Abstract

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.

Suggested Citation

  • Levy, Amnon, 2006. "Junk Food, Health and Productivity: Taste, Price, Risk and Rationality," Economics Working Papers wp06-22, School of Economics, University of Wollongong, NSW, Australia.
  • Handle: RePEc:uow:depec1:wp06-22
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    File URL: http://www.uow.edu.au/content/groups/public/@web/@commerce/@econ/documents/doc/uow012235.pdf
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    References listed on IDEAS

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    1. Levy, Amnon, 2002. "A lifetime portfolio of risky and risk-free sexual behaviour and the prevalence of AIDS," Journal of Health Economics, Elsevier, vol. 21(6), pages 993-1007, November.
    2. Patricia M. Anderson & Kristin F. Butcher, 2004. "Reading, writing, and raisinets: are school finances contributing to children’s obesity?," Working Paper Series WP-04-16, Federal Reserve Bank of Chicago.
    3. Bleichrodt, Han, 1995. "QALYs and HYEs: Under what conditions are they equivalent?," Journal of Health Economics, Elsevier, vol. 14(1), pages 17-37, May.
    4. 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.
    5. Hugo Mialon & Sue Mialon, 2005. "Sinful indulgences, soft substitutes, and self-control," Applied Economics Letters, Taylor & Francis Journals, vol. 12(12), pages 719-722.
    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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    Cited by:

    1. Amnon Levy, 2011. "An Integrative Model of Rational Diet and Physical Activity: Physiological, Gastronomic and Budgetary Aspects," Economics Working Papers wp11-06, School of Economics, University of Wollongong, NSW, Australia.
    2. 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.

    More about this item

    Keywords

    junk-food; healthy-food; relative taste; relative price; health; risk; lifequality; productivity; rationality; self-control;

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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