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A theoretical analysis of rational diet of healthy and junk foods

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Abstract

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.

Suggested Citation

  • Levy, Amnon, 2007. "A theoretical analysis of rational diet of healthy and junk foods," Economics Working Papers wp07-01, School of Economics, University of Wollongong, NSW, Australia.
  • Handle: RePEc:uow:depec1:wp07-01
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    File URL: http://www.uow.edu.au/content/groups/public/@web/@commerce/@econ/documents/web/uow020252.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Taste; Price; Endurance; Appetite; Time-preferences;

    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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