Topic 8 Paper: (Freebairn 2010)

Question 1

What does Freebairn (2008) aim to investigate?

Answer 1

Broadly speaking, the viability of an obesity tax in Australia

Question 2

What is the result found by Freebairn (2008)?

Answer 2

Freebairn suggests that an obesity tax is likely to fail to be optimal, due to the difficulty in collecting data, and the inevitability of taxing foods that healthy people consume, although perhaps in lesser amounts. He suggests other policies will be more effective in reducing the obesity rate

Question 3

What issues over a food / fat taxes does freebairn (2008) raise?

Answer 3

• What foods to tax? If it is narrowly taxed, then comsumers will subsitute away. A tax over many foods will impact everyone, healthy consumers included, causing a big dead weight loss

Question 4

For Freebairn (2008) - How does information on energy contqained in food affect energy consumption

Answer 4

-evidence suggests not at all

Question 5

Why might obesity reflect market failure?

Answer 5

• consumers not informed
• externalities that spill over to government (who themselves must induce a DWL in taxing), family members and insurance premiums
• behavioral factors, time inconsistancy, not acting rational (see addition models however)

Question 6

What are the magnitude of health costs from druge and obesity as outlined in Freebairn (2008)?

Answer 6

-Both are large

Question 7

How do obese people inflict costs on the government & public at large, as outlined in Freebairn (2008)?

Answer 7

• extra expenditures -> more tax, inc DWL or less services