Sin Taxes and Self-Control

Renke Schmacker and Sinne Smed

American Economic Journal: Economic Policy, 2023, vol. 15, issue 3, 1-34

Abstract: 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.

JEL-codes: D12 D91 H25 H31 I12 I18 L66 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Working Paper: Sin Taxes and Self-Control (2020)
Working Paper: Sin Taxes and Self-Control (2020)
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DOI: 10.1257/pol.20200479

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