SBEE/RCGD Lecture Series: Hunt Allcott
Ehrlicher Room, 3100 North Quad
The Social, Behavioral and Experimental Economics lecture series is sponsored by the School of Information, the Ross School of Business and the Department of Economics. This talk is also co-sponsored by the Research Center for Group Dynamics. Speakers from U.S. and international universities present their research at weekly seminars during the 2018-2019 academic year.
Regressive Sin Taxes, with an Application to the Optimal Soda Tax
A common objection to “sin taxes”—corrective taxes on goods that are thought to be over-consumed, such as cigarettes, alcohol, and sugary drinks—is that they often fall disproportionately on low-income consumers. This paper studies the interaction between corrective and redistributive motives in a general optimal taxation framework, and delivers empirically implementable sufficient statistics formulas for determining the optimal commodity tax.
The optimal sin tax is increasing in the price elasticity of demand, increasing in the degree to which lower-income consumers are more biased or more elastic to the tax, decreasing in the extent to which consumption is concentrated among the poor, and decreasing in income effects, because income effects imply that commodity taxes create labor supply distortions.
Contrary to common intuitions, stronger preferences for redistribution can increase the optimal sin tax, if lower-income consumers are more responsive to taxes or are more biased. As an application, we estimate the optimal nationwide tax on sugar-sweetened beverages, using Nielsen Homescan data and a specially designed survey measuring nutrition knowledge and self-control. Our estimates imply that current city-level taxes in Berkeley and elsewhere are somewhat lower than the social optimum.
Hunt Allcott is a Principal Researcher at Microsoft Research, an Associate Professor of Economics at New York University, a Research Associate at the National Bureau of Economic Research, and a Co-Editor of the Journal of Public Economics. He is a Scientific Director of ideas42, a think tank that applies insights from psychology and economics to business and policy design problems, an Affiliate of Poverty Action Lab, a network of researchers who use randomized evaluations to answer critical policy questions in the fight against poverty, and a Faculty Affiliate of E2e, a group of economists, engineers, and behavioral scientists focused on evaluating and improving energy efficiency policy. He was also a Contributing Author of the Intergovernmental Panel on Climate Change Fifth Assessment Report.
Professor Allcott holds a PhD from Harvard University and a BS and MS from Stanford University. Before coming to NYU, he was the Energy and Society Fellow in the MIT Economics Department and the MIT Energy Initiative. He has also worked in the private sector as a consultant with Cambridge Energy Research Associates and in international development as a consultant to the World Bank.
Professor Allcott is an applied microeconomist who studies topics in environmental and energy economics, industrial organization, public economics, behavioral economics, and development microeconomics. He uses a variety of tools, including both structural and reduced form econometrics, applied theory, and randomized field experiments.
The talk will begin at 11:45 a.m.