PAM 4380 guest lecture spr 2011 -- junk food taxes

PAM 4380 guest lecture spr 2011 -- junk food taxes -...

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Obesity and Tax Policy hn Cawley John Cawley PAM/ECON 4380 guest lecture April 6, 2011
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PAM-Econ 4280: Economics of Risky Health Behaviors ’ll be teaching it Fall 2011 Il l be teaching it Fall 2011 • With this course (4380), forms a two-course sequence in the economics and public policy of health behaviors – You can take these two classes in either order • Coverage of 4280: conomic models of risky behaviors: role of education – Economic models of risky behaviors: role of education, habit/addiction, price, income, advertising, peers, information – Economic consequences of risky behaviors: medical care costs, ployment wages/earnings crime employment, wages/earnings, crime – Risky behaviors examined: diet/physical activity/obesity, smoking cigarettes, drinking alcohol, drug use, risky sex All students will estimate econometric models using STATA and relevant data
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Economic Framework for Diet and Physical Activity escribed in detail in merican Journal of Preventive • Described in detail in American Journal of Preventive Medicine article • If resources were limitless, veryone would be at their ideal weight Everyone would be at their ideal weight – Everyone would maximize health, lifespan • But people are constrained – Budget constraint: can’t afford everything – Time constraint: only 24 hours in the day – Biology: higher net intake of calories raises weight
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Economic Framework • Those constraints force tradeoffs – People trade off health to have other things, to extent it raises their utility – Money: must decide between cheap food and more of ther goods or expensive food and less of other goods other goods, or expensive food and less of other goods – Time: must decide between work and recreational exercise, time spent cooking or playing with kids… – Biology: “moment on the lips vs. lifetime on the hips…”
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Economic Framework • Individuals choose to allocate their time and money so to maximize their utility (happiness) subject to their as to maximize their utility (happiness) subject to their (financial / time / biological) constraints onsumer’s solution allocate money and time such that: Consumer s solution: allocate money and time such that: – Last dollar rule: last dollar spent on each good yields equal increment of happiness – Last hour rule: last hour spent on each activity yields equal increment of happiness • Implications: – Simply telling people they should behave differently expected to have no impact – If you want people to change their behaviors then you must incentivize that change by changing the tradeoffs that people face
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Contrast Economics and Public Health • Public health concerns how people should behave in order to maximize health, longevity • Economics studies how people actually behave when trying to maximize utility •B i g differences: – Normative vs. positive statements – Health vs. happiness as people’s goal – Paternalism vs. assumption of rationality and default of consumer sovereignty
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Economic Rationale for Government
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PAM 4380 guest lecture spr 2011 -- junk food taxes -...

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