The visible hand in economics

An alternative ‘fat tax’

Posted on: September 17, 2007

Matt’s talked in the past about fuel taxes to reduce emissions and reduce the time cost of congestion. This paper suggests that there may be further benefits to a fuel tax. Using US data the author estimates that

…a $1 increase in gasoline prices would reduce obesity by 15% in the U.S., saving 16,000 lives and $17 billion per year. These monetary savings would offset approximately 16% of the increased expenditures on gasoline. Additionally, …13% of the recent rise in obesity from 1979 to 2004 can be attributed to the decline in real gas prices.

He attributes this to both an increased time spent on incidental exercise and a reduction in eating at restaurants. It seems almost too good to be true, and perhaps it is, but it’s certainly an interesting alternative to taxing unhealthy foods.

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3 Responses to "An alternative ‘fat tax’"

Surely we can come up with better ways than this to help people lose weight. What about those that are doing just fine with their health? Do we have to punish those people with higher prices to compensate for helping the overweight?

Haha, I don’t think anyone would suggest that this is the be-all and end-all of weight loss. More that it is a potentially beneficial consequence of the higher fuel taxes that we might impose to correct for other externalities of driving.

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