Sin taxes and self-control by Renke Schmacker and Sinne Smed
By: Schmacker, Renke
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Contributor(s): Smed, Sinne.
Material type: 
ArticleSubject(s): IMPUESTOS ESPECIALES | CONSUMO | OBESIDAD | BEBIDAS ALCOHOLICAS | AZÚCAR | POLITICA FISCAL | ELASTICIDAD IMPOSITIVA
In:
American Economic Journal : Economic Policy v. 15, n. 3, August 2023, p. 1-34Summary: According to theory, "sin taxes" are welfare improving if consumers with low self-control respond at least as much to the tax as consumers with high self-control. We investigate empirically if demand response to soft drink and fat tax variations in Denmark depends on consumers' self-control. We use a unique home-scan panel that includes a survey measure of self-control. When taxes increase, consumers with low self-control reduce purchases less strongly than consumers with high self-control. When taxes decrease, both groups increase their purchases similarly. The results show an asymmetry in price elasticities by self-control that is more pronounced when taxes increase.
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| OP 2135/2023/2-3 Taxing billionaires | OP 2135/2023/2-4 Externalities in international tax enforcement | OP 2135/2023/3 American Economic Journal : Economic Policy | OP 2135/2023/3-1 Sin taxes and self-control | OP 2135/2023/3-2 Common practice | OP 2135/2023/3-3 Spending responses to high-frequency shifts in payment timing | OP 2135/2023/3-4 How Social Security reform affects retirement and pension claiming |
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According to theory, "sin taxes" are welfare improving if consumers with low self-control respond at least as much to the tax as consumers with high self-control. We investigate empirically if demand response to soft drink and fat tax variations in Denmark depends on consumers' self-control. We use a unique home-scan panel that includes a survey measure of self-control. When taxes increase, consumers with low self-control reduce purchases less strongly than consumers with high self-control. When taxes decrease, both groups increase their purchases similarly. The results show an asymmetry in price elasticities by self-control that is more pronounced when taxes increase.
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