Obesity and Smoking: Can We Catch Two Birds with One Tax?

Quaderni DSE Working Paper N° 873

28 Pages Posted: 28 Mar 2013

See all articles by Davide Dragone

Davide Dragone

University of Bologna - Department of Economics

Francesco Manaresi

Bank of Italy

Luca Savorelli

University of St. Andrews - School of Economics and Finance

Date Written: March 27, 2013

Abstract

The debate on tobacco taxes and fat taxes often treats smoking and eating as independent behaviors. However, since there exists medical and sociological evidence about the interdependence between eating and smoking choices, antismoking policies may also affect the obesity prevalence and fat taxes could influence smoking behavior. We address this issue from a theoretical standpoint and propose a dynamic rational model where eating and smoking are simultaneous choices that jointly affect body weight and addiction to smoking. Focusing on direct and cross price effects, we compare tobacco taxes and fat taxes and we show that a single policy tool can reduce both smoking and body weight. In particular, fat taxes can be more effective than tobacco taxes at simultaneously fighting obesity and smoking.

Keywords: addiction, fat tax, obesity, smoking, tobacco

JEL Classification: D91, H31, I18

Suggested Citation

Dragone, Davide and Manaresi, Francesco and Savorelli, Luca, Obesity and Smoking: Can We Catch Two Birds with One Tax? (March 27, 2013). Quaderni DSE Working Paper N° 873. Available at SSRN: https://ssrn.com/abstract=2240180 or http://dx.doi.org/10.2139/ssrn.2240180

Davide Dragone (Contact Author)

University of Bologna - Department of Economics ( email )

Piazza Scaravilli 2
Bologna, 40126
Italy
0039.051.2098880 (Phone)

HOME PAGE: http://https://www.unibo.it/sitoweb/davide.dragone/en

Francesco Manaresi

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Luca Savorelli

University of St. Andrews - School of Economics and Finance ( email )

The Scores, Castlecliff
St. Andrews, Fife KY16 8RD
United Kingdom

HOME PAGE: http://www.st-andrews.ac.uk/economics/

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