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Sin Taxes and Self-Control

Referierte Aufsätze Web of Science

Renke Schmacker, Sinne Smed

In: American Economic Journal: Economic Policy 15 (2023), 3, S. 1-34


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.

Renke Schmacker

Research Associate in the Public Economics Department

Topics: Consumers, Taxes

JEL-Classification: D12;D91;H25;H31;I12;I18;L66