Time Allocation and Snacks and Sugar Sweetened Beverages Taxation

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Time Allocation and Snacks and Sugar Sweetened Beverages Taxation Alberto Pench1 Received: 23 August 2018 / Accepted: 19 June 2019 © Società Italiana degli Economisti (Italian Economic Association) 2019

Abstract Obesity is a public health problem and several countries have introduced or proposed taxes on unhealthy foods. The paper analyses the effects of the introduction of a tax on snacks/ssb in three different models where their consumption is a function of part of leisure time, due to the strength of habits and to the role of social cues in eating behaviour. All models encompass the possibility to perform physical exercise in order to reduce obesity (if individuals are weight conscious) and differ in residual time allocation: devoted to the bulk of daily activities, to labour supply or to other leisure activities. The main finding is that taxation always helps in reducing snacks/ssb consumption: nonetheless, in the first model, which can describe the choice of an adolescent, the tax might induce an increase in obesity in physically inactive individuals because of the shrinking of the choice set. In the second, it might arise if leisure linked to snacks/ssb consumption and the aggregate of consumption goods are separable; in the third, taxation achieves a decrease in obesity under weak conditions, and separability between the aggregate of consumption goods and residual leisure is sufficient to induce a decrease in obesity in physically active individuals. From a theoretical point of view, the paper underscores the relevance of the freedom to choose how to allocate time among different activities while, from an applied perspective, strongly supports snacks/ssb taxation combined with a campaign aimed at promoting physical activity even in the working environment. Keywords Obesity · Snacks · Sugar sweetened beverages · Unhealthy food taxation · Time allocation JEL Classification D11 · H31 · I18

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Alberto Pench [email protected] Department of Political Sciences, University of Pisa, Via Serafini 3, 56100 Pisa, Italy

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A. Pench

1 Introduction The increase in obesity registered in most of developed countries and, in recent years, even in less developed ones, particularly in urban settings, has been recognized a major source of concern for public health for many years and has quite naturally attracted the attention of scholars from many fields. A recent excellent survey by Cawley (2015), making reference to a wide and updated literature, covers the main topics some of which will be only mentioned in this introduction. An impressive number of studies have analysed obesity from different perspectives and what emerges is the complex nature of the phenomenon where different factors play a significant role. Cutler et al. (2003), with reference to the United States, test the hypothesis that the rise in mass food preparation, made possible by technological changes, might explain trends in dietary behaviour responsible for the increase in obesity. Rosin (2008) reviews the literature on causes of obesity focusing,