Behavioral Economics and Obesity: An Analysis of Fitness-Based Tax Incentives
Keywords: behavioral economics, fitness, tax credits, tax incentives
AbstractB oth federal and state governments have experimented with policy proposals aimed at decreasing obesity rates, mostly through the regulation of unhealthy foods. There has been little research, however, on the impact of fitness-based policy initiatives on obesity rates. To address these issues, this paper first outlines previous policies aimed at preventing obesity and provides justification in favor of government intervention. In particular, this paper argues that hyperbolic discounting, a specific type of time-inconsistent preference where individuals make decisions that favor instant gratification rather than long-term benefits, provides economic justification for government intervention to combat obesity. It then uses Canada as a case study to demonstrate the effect that fitness-based tax credits have on physical activity, obesity, and long-term healthcare costs, and highlights a current pending piece of legislation in the 114th US Congress that would bring a similar program to the United States. More research is needed to confirm the effectiveness of fitness tax incentives on increasing physical activity among currently sedentary individuals. Nonetheless, this paper concludes by suggesting that fitness-based tax incentives are more politically viable than food regulations.