The debate on tobacco and fat taxes often treats smoking and eating as independent behaviors. However, the available evidence shows that they are interdependent, which implies that policies against smoking or obesity may have larger scope than expected. To address this issue, we propose a dynamic rational model where eating, smoking, and physical exercise are simultaneous choices that jointly affect body weight and addiction to smoking. Focusing on direct and cross-price effects, we study the impact of tobacco and food taxes, and we show that in both cases a single policy tool can reduce both smoking and body weight.
- Fat tax
- Physical exercise