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Generalized Nutrient Taxes Can Increase Consumer Welfare

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  • David Bishai

Abstract

Certain nutrients can stimulate appetite making them fattening in a way that is not fully conveyed by the calorie content on the label. For rational eaters, this information gap could be corrected by more labeling. As an alternative, this paper proposes a set of positive and negative taxes on the fattening and slimming nutrients in food rather than on the food itself. There are conditions under which this tax plus subsidy system could increase welfare by stopping unwanted weight gain while leaving the final retail price of food unchanged. A nutrient tax system could improve welfare if fattening nutrients, net of their effect on weight, are inferior goods and the fiscal cost of administering the tax is sufficiently low. More data on the price elasticity of demand for nutrients as well as data on how specific nutrients affect satiety and how total calorie intake would be necessary before one could be sure a nutrient tax would work in practice. Copyright © 2014 John Wiley & Sons, Ltd.

Suggested Citation

  • David Bishai, 2015. "Generalized Nutrient Taxes Can Increase Consumer Welfare," Health Economics, John Wiley & Sons, Ltd., vol. 24(11), pages 1517-1522, November.
    • Handle: RePEc:wly:hlthec:v:24:y:2015:i:11:p:1517-1522
    DOI: 10.1002/hec.3101
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    References listed on IDEAS

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    1. Harding, Matthew & Lovenheim, Michael, 2017. "The effect of prices on nutrition: Comparing the impact of product- and nutrient-specific taxes," Journal of Health Economics, Elsevier, vol. 53(C), pages 53-71.
    2. Jayson L. Lusk & Christiane Schroeter, 2013. "When Do Fat Taxes Increase Consumer Welfare? Reply To Neill," Health Economics, John Wiley & Sons, Ltd., vol. 22(10), pages 1284-1286, October.
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    4. Senarath Dharmasena & Oral Capps, 2012. "Intended and unintended consequences of a proposed national tax on sugar‐sweetened beverages to combat the U.S. obesity problem," Health Economics, John Wiley & Sons, Ltd., vol. 21(6), pages 669-694, June.
    5. Chouinard Hayley H & Davis David E & LaFrance Jeffrey T & Perloff Jeffrey M, 2007. "Fat Taxes: Big Money for Small Change," Forum for Health Economics & Policy, De Gruyter, vol. 10(2), pages 1-30, June.
    6. Jason M. Fletcher & David E. Frisvold & Nathan Tefft, 2011. "Are soft drink taxes an effective mechanism for reducing obesity?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 30(3), pages 655-662, June.
    7. Jon R. Neill, 2013. "When Do Fat Taxes Increase Consumer Welfare? Comment On A Claim By Lusk And Schroeter," Health Economics, John Wiley & Sons, Ltd., vol. 22(10), pages 1282-1283, October.
    8. Jason M. Fletcher & David Frisvold & Nathan Tefft, 2010. "Can Soft Drink Taxes Reduce Population Weight?," Contemporary Economic Policy, Western Economic Association International, vol. 28(1), pages 23-35, January.
    9. Kuo S. Huang, 1996. "Nutrient Elasticities in a Complete Food Demand System," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(1), pages 21-29.
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    2. Ou Yang & Peter Sivey & Andrea M. de Silva & Anthony Scott, 2020. "Parents' Demand for Sugar Sweetened Beverages for Their Pre‐School Children: Evidence from a Stated‐Preference Experiment," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(2), pages 480-504, March.

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