Fiscal measures to promote healthier choices

an economic perspective on price-based interventions

A. Ludbrook (Corresponding Author)

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

Introduction
Non-communicable diseases strongly linked to lifestyle factors create an increasing burden of disease. Fiscal interventions (tax and subsidy) are one approach to improving lifestyles, but their effective design might be improved.

Economic framework
Conventional economic theory suggests that fiscal interventions are only used to correct prices for externalities (costs or benefits imposed on others). These can be difficult to calculate accurately. Fiscal interventions operate by altering the prices that consumers face. Price increases are predicted to reduce demand, and the size of the effect is measured by the price elasticity. Tax changes may not translate directly into price changes, however.

Evidence for the effect of taxes, subsidies and prices
There is strong evidence for the effectiveness of taxation in relation to reducing tobacco and alcohol consumption and resulting harms. There has been less evaluation of taxation in relation to other unhealthy behaviors or of subsidies to promote healthy behaviors.

Discussion
Fiscal levers have been used as interventions to improve health rather than for market correction. Taking account of behavioral insights may improve the design of fiscal interventions and combining interventions may increase effectiveness.

Conclusion
Both types of intervention have a role in improving health, but there may be challenges in promoting uptake of healthy behaviors.
Original languageEnglish
Pages (from-to)180-187
Number of pages8
JournalPublic Health
Volume169
Early online date21 Mar 2019
DOIs
Publication statusPublished - Apr 2019

Fingerprint

Economics
Taxes
Life Style
Elasticity
Health
Tobacco Use
Alcohol Drinking
Cost-Benefit Analysis
Communicable Diseases

Keywords

  • Economics
  • Taxation
  • Subsidies
  • Nudge
  • Tobacco
  • Alcohol
  • Diet
  • Physical activity
  • BEHAVIORAL ECONOMICS
  • ALCOHOL TAX
  • SMOKING
  • PUBLIC-POLICY
  • FOOD TAX
  • SUBSTITUTIONS
  • PRODUCT
  • SATURATED FAT
  • CONSUMPTION

Cite this

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title = "Fiscal measures to promote healthier choices: an economic perspective on price-based interventions",
abstract = "IntroductionNon-communicable diseases strongly linked to lifestyle factors create an increasing burden of disease. Fiscal interventions (tax and subsidy) are one approach to improving lifestyles, but their effective design might be improved.Economic frameworkConventional economic theory suggests that fiscal interventions are only used to correct prices for externalities (costs or benefits imposed on others). These can be difficult to calculate accurately. Fiscal interventions operate by altering the prices that consumers face. Price increases are predicted to reduce demand, and the size of the effect is measured by the price elasticity. Tax changes may not translate directly into price changes, however.Evidence for the effect of taxes, subsidies and pricesThere is strong evidence for the effectiveness of taxation in relation to reducing tobacco and alcohol consumption and resulting harms. There has been less evaluation of taxation in relation to other unhealthy behaviors or of subsidies to promote healthy behaviors.DiscussionFiscal levers have been used as interventions to improve health rather than for market correction. Taking account of behavioral insights may improve the design of fiscal interventions and combining interventions may increase effectiveness.ConclusionBoth types of intervention have a role in improving health, but there may be challenges in promoting uptake of healthy behaviors.",
keywords = "Economics, Taxation, Subsidies, Nudge, Tobacco, Alcohol, Diet, Physical activity, BEHAVIORAL ECONOMICS, ALCOHOL TAX, SMOKING, PUBLIC-POLICY, FOOD TAX, SUBSTITUTIONS, PRODUCT, SATURATED FAT, CONSUMPTION",
author = "A. Ludbrook",
note = "Funding HERU is core funded by the Chief Scientist Office, Scottish Government Health and Social Care Directorates, and the University of Aberdeen.",
year = "2019",
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pages = "180--187",
journal = "Public Health",
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TY - JOUR

T1 - Fiscal measures to promote healthier choices

T2 - an economic perspective on price-based interventions

AU - Ludbrook, A.

N1 - Funding HERU is core funded by the Chief Scientist Office, Scottish Government Health and Social Care Directorates, and the University of Aberdeen.

PY - 2019/4

Y1 - 2019/4

N2 - IntroductionNon-communicable diseases strongly linked to lifestyle factors create an increasing burden of disease. Fiscal interventions (tax and subsidy) are one approach to improving lifestyles, but their effective design might be improved.Economic frameworkConventional economic theory suggests that fiscal interventions are only used to correct prices for externalities (costs or benefits imposed on others). These can be difficult to calculate accurately. Fiscal interventions operate by altering the prices that consumers face. Price increases are predicted to reduce demand, and the size of the effect is measured by the price elasticity. Tax changes may not translate directly into price changes, however.Evidence for the effect of taxes, subsidies and pricesThere is strong evidence for the effectiveness of taxation in relation to reducing tobacco and alcohol consumption and resulting harms. There has been less evaluation of taxation in relation to other unhealthy behaviors or of subsidies to promote healthy behaviors.DiscussionFiscal levers have been used as interventions to improve health rather than for market correction. Taking account of behavioral insights may improve the design of fiscal interventions and combining interventions may increase effectiveness.ConclusionBoth types of intervention have a role in improving health, but there may be challenges in promoting uptake of healthy behaviors.

AB - IntroductionNon-communicable diseases strongly linked to lifestyle factors create an increasing burden of disease. Fiscal interventions (tax and subsidy) are one approach to improving lifestyles, but their effective design might be improved.Economic frameworkConventional economic theory suggests that fiscal interventions are only used to correct prices for externalities (costs or benefits imposed on others). These can be difficult to calculate accurately. Fiscal interventions operate by altering the prices that consumers face. Price increases are predicted to reduce demand, and the size of the effect is measured by the price elasticity. Tax changes may not translate directly into price changes, however.Evidence for the effect of taxes, subsidies and pricesThere is strong evidence for the effectiveness of taxation in relation to reducing tobacco and alcohol consumption and resulting harms. There has been less evaluation of taxation in relation to other unhealthy behaviors or of subsidies to promote healthy behaviors.DiscussionFiscal levers have been used as interventions to improve health rather than for market correction. Taking account of behavioral insights may improve the design of fiscal interventions and combining interventions may increase effectiveness.ConclusionBoth types of intervention have a role in improving health, but there may be challenges in promoting uptake of healthy behaviors.

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KW - Taxation

KW - Subsidies

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KW - Tobacco

KW - Alcohol

KW - Diet

KW - Physical activity

KW - BEHAVIORAL ECONOMICS

KW - ALCOHOL TAX

KW - SMOKING

KW - PUBLIC-POLICY

KW - FOOD TAX

KW - SUBSTITUTIONS

KW - PRODUCT

KW - SATURATED FAT

KW - CONSUMPTION

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U2 - 10.1016/j.puhe.2019.02.008

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