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dc.contributor.authorCremer, Helmuthen_US
dc.contributor.authorde Donder, Philippeen_US
dc.contributor.authorMaldonado, Daríoen_US
dc.contributor.authorPestieau, Pierreen_US
dc.description.abstractWe consider a two-period model. In the first period, individuals consume two goods: one is sinful and the other is not. The sin good brings pleasure but has a detrimental effect on second period health and individuals tend to underestimate this effect. In the second period, individuals can devote part of their saving to improve their health status and thus compensate for the damage caused by their sinful consumption. We consider two alternative specifications concerning this second period health care decision: either individuals acknowledge that they have made a mistake in the first period out of myopia or ignorance, or they persist in ignoring the detrimental effect of their sinful consumption. We study the optimal linear taxes on sin good consumption, saving and health care expenditures for a paternalistic social planner. We compare those taxes in the two specifications. We show under which circumstances the first best outcome can be decentralized and we study the second best taxes when saving is unobservable.en_US
dc.publisherCenter for Economic Studies and Ifo Institute (CESifo) Munichen_US
dc.relation.ispartofseriesCESifo working paper 2297en_US
dc.subject.keywordbehavioral economicsen_US
dc.subject.keyworddual self v single selfen_US
dc.subject.stwSpezielle Verbrauchsteueren_US
dc.subject.stwOptimale Besteuerungen_US
dc.subject.stwMeritorisches Guten_US
dc.titleTaxing sin goods and subsidizing health careen_US
dc.typeWorking Paperen_US
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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