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CASH INCENTIVES AND UNHEALTHY FOOD CONSUMPTION
Author(s) -
Flores Miguel,
Rivas Javier
Publication year - 2017
Publication title -
bulletin of economic research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.227
H-Index - 29
eISSN - 1467-8586
pISSN - 0307-3378
DOI - 10.1111/boer.12085
Subject(s) - incentive , subsidy , cash , consumption (sociology) , economics , public economics , overconsumption , cash transfers , food security , monetary economics , microeconomics , finance , production (economics) , agriculture , market economy , social science , sociology , ecology , biology
ABSTRACT This paper studies the effectiveness of taxes, subsidies and cash incentives in reducing unhealthy food consumption. Using an inter‐temporal rational choice model with habit, we calibrate and simulate the effect of those policies to US and UK data. Our findings suggest that cash incentives may be the most effective policy in reducing unhealthy food consumption. However, when comparing the reduction in costs for the social security system with the implementation costs, cash incentives can lead to significant monetary losses. Taxes are relatively ineffective in reducing unhealthy food consumption. Finally, subsidies have the best balance between effectiveness and monetary benefits to society.