Program > Program by speaker > Zarko Kalamov

This paper analyzes optimal consumption choices and weight when consumers make errors due to self-control problems and naivete. Contrary to the existing literature, we show that both types of errors do not determine whether an individual is overweight or underweight. Instead, they affect only the extent of over- or underweight and do not impact a healthy weight consumer. Consequently, a paternalistic tax on unhealthy food that is designed to correct self-control problems and naivete cannot induce individuals to have a healthy weight. Moreover, there exists a tax that induces both rational and non-rational individuals to have a healthy weight in steady state. This tax does not depend on the degree of self-control problems or naivete.