Consumption and prices

Since 2007 it has not been permitted to advertise food and drink that is high in fat, salt or sugar during children's television programmes. Evidence from Ofcom suggests that in 2016 children spent 64% of their viewing time watching programmes outside children’s programming. Recent discussion around the possibility of a second wave of the Government’s childhood obesity strategy has included calls from health campaigners and leaders of all the main opposition parties to extend current restrictions on when food and drink products that are high in fat, salt or sugar can be advertised to cover all pre-watershed advertising.

This briefing note provides estimates of the falls in consumer prices that could be expected if the UK leaves the EU's Customs Union and reduce its tariffs. It finds that even if all tariffs were abolished, any reduction in consumer prices would be more than offset by the 2% increase in prices that have resulted from the post-referendum depreciation of sterling.

In an influential paper, Deaton and Paxson (1998) raise an important puzzle inunderstanding returns to scale in household consumption. They note that, holding percapita resources constant, returns to scale (in at least some goods) imply that larger households are better off, and so should consume more of private goods such as food. However, they document in a range of data sets that larger households have lower per capita food expenditures (holding per capita resources constant).

Journal in American Economic Association

The Hamilton method for estimating CPI bias is simple, intuitive, and has been widely adopted. We show that the method conflates CPI bias with variation in cost-of-living across income levels.

We look at how strongly shocks to asset values affect labour supply, using Italian data.

Following a recent judgment, the UK Supreme Court confirmed that Scottish Government legislation for a minimum unit price for alcohol is lawful. The Scottish Government plans to introduce the measure on 1 May 2018. Meanwhile, the Welsh National Assembly is considering introducing a minimum unit price for alcohol. In this briefing note, we provide evidence on the likely impact of this type of reform.

CEPR Discussion Paper DP12499

We study optimal corrective taxation in the alcohol market. Consumption generates negative externalities that are non-linear in the total amount of alcohol consumed. If tastes for products are heterogeneous and correlated with marginal externalities, then varying tax rates on different products can lead to welfare gains.

Soda taxes aim to reduce excessive sugar consumption. Their effectiveness depends on whether they target individuals for whom the harm of consumption is largest. We estimate demand and account for supply-side equilibrium pass-through. We exploit longitudinal data to estimate individual preferences, which allows exible heterogeneity that we relate to a wide array of individual characteristics. We show that soda taxes are effective at targeting young consumers but not individuals with high total dietary sugar; they impose the highest monetary cost on poorer individuals, but are unlikely to be strongly regressive if we account for averted future costs from over consumption.

We present evidence from a natural field experiment designed to shed light on whether individual behavior is consistent with a neoclassical model of utility maximization subject to budget constraints.

Corrective taxes have been implemented in a number of countries with the aim of addressing growing concern about the rise in obesity- and diet-related diseases. The rationale is that food consumption imposes costs on the consumer in the future that they do not fully take into account at the point of consumption (‘internalities’). Corrective taxes have the potential to improve welfare by reducing suboptimally high consumption. We review the literature on the size of these internalities and on the optimal corrective tax, which depends on the patterns of internalities, the price responsiveness of consumers, and on redistributive aims.

Paper forthcoming in Quantitative Economics.

We document that households in the UK with extremely low measured income tend to spend much more than those with merely moderately low income. This phenomenon is evident throughout three decades worth of microdata and across different employment states, levels of education and marital statuses.

We study whether and how individuals protect energy intakes against income shocks and we find that households use substitution, both between and within spending categories. Total nutritional intakes are almost fully protected against income shocks and 12-16% of permanent income shocks on food spending is transmitted to energy intake.

Using recall and diary food expenditure data from Canada, we compare estimates of the household size elasticity of per capita food expenditure.