How Do Informational Prompts Affect Choices in the School Lunchroom? by Chien-Yu Lai, John A. List, Anya Savikhin Samek :: SSRN

March 6, 2017

Obesity rates have doubled in the last forty years, and a major cause is the consumption of sugar-sweetened beverages. In this paper, we identify channels through which information – about health benefits or taste – affects beverage choice. We conduct a field experiment in a school lunchroom with 2,500 children, evaluating the impact of informational prompts on beverage choice and consumption over 2 weeks. We find that prompts alone increase the proportion of children choosing and consuming the healthier white milk relative to sugar-sweetened chocolate milk from 20% in the control group to 30% in the treatment groups. Adding health or taste messaging to the prompt does not seem to make a difference. We survey students and find that most prompts affect perceived healthfulness of the milk, but not perceived taste. Finally, we find that the prompts are nearly as effective as a small non-monetary incentive.

Source: How Do Informational Prompts Affect Choices in the School Lunchroom? by Chien-Yu Lai, John A. List, Anya Savikhin Samek :: SSRN

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Empty Discarded Pack Data and the Prevalence of Illicit Trade in Cigarettes by Alberto Aziani, Jonathan Kulick, Neill Norman, James E. Prieger :: SSRN

February 12, 2017

Illicit trade in tobacco products (ITTP) is big business in the United States and creates many harms including reduced tax revenues; damages to the economic interests of legitimate actors; funding for organized-crime and terrorist groups; negative effects of participation in illicit markets, such as violence and incarceration; and reduced effectiveness of smoking-reduction policies, leading to increased damage to health.

To improve data availability for study in this area, we describe and make available a large, novel set of data from empty discarded pack (EDP) studies. In EDP studies, teams of researchers collect all cigarette packs discarded (either in trash receptacles or as litter) in the public spaces of selected neighborhoods. Packs are examined for the absence of local tax stamps, signs of non-authentic packaging or stamps, and other indications of potential tax evasion or counterfeit product. We describe the data and analyze the prevalence of ITTP. Data from 23 collections in 10 U.S. cities from 2010 to 2014 are available, yielding 106,500 observations (by far the largest dataset of its kind available for academic study). Each observation includes dozens of variables covering the brand, location to the ZIP code level, tax status, counterfeit status, and other information about the pack.

There is significant evidence of tax avoidance (up to 74% of packs in New York City). In some markets there is also a significant amount of illicit trade (up to over half the market in New York City), which includes bootlegging, counterfeits, cigarettes produced for illicit-market sales, and cigarettes without any tax stamps. These data will be highly useful for research in illicit markets and organized crime.

Source: Empty Discarded Pack Data and the Prevalence of Illicit Trade in Cigarettes by Alberto Aziani, Jonathan Kulick, Neill Norman, James E. Prieger :: SSRN


The Short- and Long-Run Effects of Smoking Cessation on Alcohol Consumption by Benjamin Ukert :: SSRN

February 4, 2017

This paper examines the short- and long-term effect of quitting smoking on alcoholic beverage consumption using the Lung Health Study, a randomized smoking cessation program. Building on the theory of rational addiction, I estimate the relationship between smoking and alcohol consumption using several different smoking measures. Moreover, I implement a two-stage Least squares estimation strategy utilizing the randomized smoking cessation program as an instrument. The empirical analysis leads to three salient findings. First, self-reported and clinically verified smoking measures suggest that quitting smoking lowers alcoholic beverages consumption by 11.5%. Second, cigarette consumption dating back up to 60 months affects alcohol consumption, and those with the highest average consumption see the largest increase in alcohol consumption. Lastly, the length of abstaining from smoking decreases alcohol consumption, where participants decrease alcohol consumption by up to 20% from baseline levels after five years of smoking cessation. As a result, these findings suggest that the public health and finance benefits are undervalued in smoking cessations treatments.

Source: The Short- and Long-Run Effects of Smoking Cessation on Alcohol Consumption by Benjamin Ukert :: SSRN


Regressive Sin Taxes by Benjamin B Lockwood, Dmitry Taubinsky :: SSRN

February 2, 2017

A common objection to “sin taxes”—corrective taxes on goods like cigarettes, alcohol, and sugary drinks, which are believed to be over-consumed—is that they fall disproportionately on low-income consumers. This paper studies the interaction between corrective and redistributive motives in a general optimal taxation framework. On the one hand, redistributive concerns amplify the corrective benefits of a sin tax when sin good consumption is concentrated on the poor, even when bias and demand elasticities are constant across incomes. On the other hand, a sin tax can generate regressivity costs, raising more revenue from the poor than from the rich. Sin tax regressivity can be offset by targeted transfers or income tax reforms if differences in sin good consumption are driven by income effects, but not if they are driven by preference heterogeneity, and not if the indirect incentives the sin tax generates for labor supply decisions are not salient. The price elasticity of demand determines the extent to which corrective benefits versus regressivity costs determine the size of the optimal tax. We implement our optimal tax formulas in a calibrated model of sugar-sweetened beverage consumption for a range of parameter values suggested by empirical work.

Source: Regressive Sin Taxes by Benjamin B Lockwood, Dmitry Taubinsky :: SSRN


Low-Cost Obesity Interventions: The Market for Foods by Michael S. Finke, Sandra J. Huston :: SSRN

January 23, 2017

Obesity accounts for medical costs and lost productivity totaling more than $100 billion per year. Two important economic factors have been forwarded to explain obesity trends. The first is that healthy, palatable foods are no longer affordable to lower-income consumers. Recent decades have seen a trend toward lower consumption of nutrient dense fruits and vegetables and increasing consumption of less expensive energy-dense foods such as added sugars, fats, and refined grains among lower socioeconomic status households. The second is that lower socioeconomic status is associated with less investment in future well-being through healthy behaviors such as good nutrition and regular exercise. Both the availability of inexpensive, convenient, high-calorie foods and the lack of a desire to eat a healthy diet may explain obesity trends. However, they imply different means of reversing these trends.

Taxes and subsidies are economic policy instruments that can induce healthier diets. Advances in food production have reduced the calorie costs of sweeteners and fats well below the costs of fruits, vegetables and proteins. Aligning diets with USDA recommendations would require significant market intervention. In order to improve diet quality, policymakers need to focus on the aggregate supply of healthy and unhealthy foods. Investing in better nutrition information only shifts the supply of healthier foods toward higher-income, health conscious consumers. The most promising food consumption policy interventions focus on providing incentives to increase production of healthier foods, and modifying choice architecture to improve diet quality among myopic consumers who are less likely to select a healthy diet.

Source: Low-Cost Obesity Interventions: The Market for Foods by Michael S. Finke, Sandra J. Huston :: SSRN


Replication of Goolsbee, Lovenheim and Slemrod’s ‘Playing with Fire: Cigarettes, Taxes and Competition from the Internet’ (American Economic Journal: Economic Policy, 2010) by Emily Ann Satterthwaite :: SSRN

December 9, 2016

This study replicates the empirical findings of Goolsbee, Lovenheim and Slemrod (2010) (“GLS”) and performs a variety of robustness checks. Using taxable cigarette consumption, real cigarette excise tax rates, wholesale cigarette prices, per capita income, and other state-level data for the period 1980-2005, GLS report that rising Internet penetration in the presence of cigarette taxes has a significant causal effect on the elasticity of demand for taxable cigarettes. I am able to exactly replicate GLS’s findings. My robustness checks consist of three parts. First, I check sensitivity to the removal of certain outlier cohorts of states from the data set. Second, I use population unweighted state-year observations in place of GLS’s population-weighted observations. Third, I probe the robustness of GLS’s key interaction term (Internet penetration*cigarette taxes) by (i) adding Internet penetration interaction terms to all main effects in the model and (ii) performing an orthogonalization procedure (Balli and Sørensen, 2013) to prevent the estimate of the key interaction term from picking up the effect of the interaction of the included variables with cigarette taxes due to their correlation with Internet penetration. I found low sensitivity to the first two robustness checks. On the third, GLS’s estimate was robust to the inclusion of additional Internet interaction terms but was not robust to the orthogonalization procedure. This raises the possibility that the effect identified by GLS is an artifact of spurious correlation between Internet penetration and cigarette taxes over time. In sum, GLS’s data may have insufficient power to identify the stand-alone effect of Internet penetration on cigarette tax-sales elasticities in a fully-interacted model.

Source: Replication of Goolsbee, Lovenheim and Slemrod’s ‘Playing with Fire: Cigarettes, Taxes and Competition from the Internet’ (American Economic Journal: Economic Policy, 2010) by Emily Ann Satterthwaite :: SSRN


Comprehensive Indoor Smoking Bans and Smoking Prevalence: Evidence from the BRFSS by Thomas Carlton, Michael Darden, John Levendis, Sang Hyup Lee, Iben Ricket :: SSRN

November 4, 2016

In an effort to reduce exposure to secondhand smoke, many governments have enacted smoke-free laws in public spaces. To the extent that smoke-free laws change perceptions, norms and attitudes about tobacco use, these laws may also reduce the prevalence and intensity of cigarette consumption. Using nationally representative data on over four millions individuals spanning 15 years, we study the average effects of comprehensive, state-level indoor smoking bans on smoking prevalence in the United States. Our research design exploits within state variation in smoking prevalence, as well as the rapid diffusion of comprehensive bans across states between 2002 and 2010. Our results suggest that a comprehensive indoor smoking ban is associated with a 2.35% to 3.29% average reduction in smoking prevalence, a range that is robust to various specifications. These effects are roughly equivalent to a $1 to $1.50 increase in a state’s cigarette tax. Finally, we demonstrate that state-level indoor bans in bars may significantly decrease smoking prevalence in specific subpopulations, particularly young, female, low-income, and binge drinking individuals.

Source: Comprehensive Indoor Smoking Bans and Smoking Prevalence: Evidence from the BRFSS by Thomas Carlton, Michael Darden, John Levendis, Sang Hyup Lee, Iben Ricket :: SSRN