The Skinny on a Fat Tax: Obesity and Microeconomics

Abstract

The growing problem of obesity in the U.S. has prompted calls for government action, including the imposition of a "fat tax." The author uses microeconomic theory and a cost-benefit framework to explore the pros and cons of a fat tax. She applies theories of rational and irrational consumer decision-making to obesity-related consumption decisions and presents a simple supply and demand model to suggest the likely consequences of a fat tax. The author concludes that, before implementing a fat tax, additional research is needed to determine if a fat tax is merely the latest fad or a significant policy initiative that will make real contributions to correcting a major health problem in the United States.