Evaluating Marginal Internalities: A New Approach

Zarko Kalamov

No 9476, CESifo Working Paper Series from CESifo

Abstract: This paper develops a new sufficient statistic approach for estimating the marginal internality from sin good consumption. It models a biased consumer who faces uncertain health harms and receives mandatory health insurance. I show that the marginal internality can be identified by observing how sin good demand reacts to changes in health insurance coverage. The method does not require to recover the true willingness to pay for the sin good or to elicit consumers’ biases using surveys. I calibrate the model to sugary drinks consumption. My results are consistent with studies that use survey-based measures of biases.

Keywords: marginal internality; self-control; biased beliefs (search for similar items in EconPapers)
JEL-codes: D11 D62 H21 H31 I12 I13 I18 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-hea, nep-ias and nep-ore
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_9476

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