Junk-food, home cooking, physical activity and obesity: The effect of the fat tax and the thin subsidy

Gideon Yaniv, Odelia Rosin, Yossef Tobol

Research output: Contribution to journalArticlepeer-review

64 Scopus citations

Abstract

In an effort to reduce the growing prevalence of obesity, a tax on junk-foods, known as 'fat tax', has been proposed, the revenue from which could be used to finance a 'thin subsidy' for healthy foods or exercising equipment. The present paper addresses the fat tax and thin subsidy within a food-intake rational-choice model. Assuming that healthy meals are cooked at home with purchased ingredients and time input, the paper examines the effects on obesity of a tax on junk-food meals and a subsidy to cooking ingredients, distinguishing between a weight-conscious and a non-weight conscious individual, and between a weight-conscious individual who is physically active and physically inactive. The results show that for a non-weight conscious individual a fat tax will unambiguously reduce obesity, whereas a thin subsidy may increase obesity. However, for a weight-conscious individual, particularly one who is physically active, even a fat tax may increase obesity, as it may reduce not just the consumption of junk-food, but also the time devoted to physical activity. The paper explores conditions under which obesity will rise, fall, or remain intact following the introduction of a fat tax or a thin subsidy.

Original languageEnglish
Pages (from-to)823-830
Number of pages8
JournalJournal of Public Economics
Volume93
Issue number5-6
DOIs
StatePublished - Jun 2009
Externally publishedYes

Keywords

  • Fat tax
  • Home cooking
  • Junk-food
  • Obesity
  • Physical activity
  • Thin subsidy

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