Income-Expenditure Elasticities of Less-Healthy Consumption Goods
March 29, 2017
Published Paper
Growing American waistlines are stressing public health expenditures. By 2030, total health care costs attributable to obesity could reach $956.9 billion, or as much as 18 percent of total US health care costs (Wang et al., 2008).
While the consumption of alcohol and tobacco have received a great deal of attention in the economics and health literatures, consumption of other unhealthy goods, such as soda, candy, chips, and other snack foods, only recently have begun to draw the attention of researchers. Consequently, we know little about the impact selective excise taxes may have on consumers of these goods.
In this study, we explore the characteristics of households that consume 12 less healthy goods—alcohol, cigarettes, fast food, items sold at vending machines, purchases of food away from home, cookies, cakes, chips, candy, donuts, bacon, and carbonated soft drinks. Specifically, we focus the effects on consumption of income. We calculate income-expenditure elasticities to quantify the extent to which expenditures on such goods vary with income.
