For the abstract, working paper versions and more details of each paper, please click on the bullet.
A new year, a new you? A two-selves model of within-individual variation in food purchases
(with Laurens Cherchye, Bram De Rock, Rachel Griffith, Martin O’Connell and Frederic Vermeulen), July 2018.
We document that within-individual variation in food choices is substantial and has potentially important consequences for nutrition, and hence well-being. We develop an approach that allows us to study the determinants of this within-individual variation within an economic framework and allow for across-individual preference heterogeneity. We show that around one-quarter of within-individual fluctuations in diet quality are explained by standard economic variables (prices and budgets), along with advertising and weather. The residual fluctuations are important and are larger for lower income and younger people, and individuals who state they are impulsive.
Tax design in the alcohol market
(with Rachel Griffith and Martin O’Connell), April 2018.
Conditionally accepted by the Journal of Public Economics.
| VOX |
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. We study this problem in an optimal tax framework and empirically for the UK alcohol market. We find heavy drinkers have systematically different patterns of alcohol demands and that welfare gains from optimally varying rates are higher the more concentrated externalities are amongst heavy drinkers.
Why do retailers advertise store brands differently across product categories?
(with Rachel Griffith and Michal Krol), Journal of Industrial Economics (forthcoming).
We provide new evidence on retailers’ pricing and advertising of store brands in the UK grocery markets. We analyse a simple Hotelling model in which retailers and manufacturers endogenously advertise their respective brands; we account for the impact of advertising on retailer–manufacturer bargaining and downstream competition. The model predicts that retailers advertise their store brands less when advertising is more rivalrous. We present empirical evidence consistent with this prediction. According to our model, aggregate consumer surplus can be higher with store brands than when they are absent from the market.
Corrective Taxation and Internalities from Food Consumption
(with Rachel Griffith and Martin O’Connell), CESifo Economic Studies (2017) 64(1): 1-14.
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.
The Importance of Product Reformulation Versus Consumer Choice in Improving Diet Quality
(with Rachel Griffith and Martin O’Connell), Economica (2017) 84: 34-53.
Improving diet quality has been a target of public health policy. Governments have encouraged consumers to make healthier food choices and firms to reformulate food products. Evaluation of such policies has focused on the impact on consumer behaviour; firm behaviour has been less well studied. We show that the recent decline in dietary salt intake in the UK was entirely attributable to product reformulation; consumer switching between products worked in the opposite direction and led to a slight increase in grocery salt intensity. These findings point to the important role that firms can play in achieving public policy goals.
Shopping Around: How Households Adjusted Food Spending over the Great Recession
(with Rachel Griffith and Martin O’Connell), Economica (2016) 83: 247-280.
Over the Great Recession UK households reduced real food expenditure. We show that they were able to maintain the number of calories that they purchased, and the nutritional quality of these calories, by adjusting their shopping behaviour. We document the mechanisms that households used. We motivate our analysis with a model of shopping behaviour in which households adjust shopping effort and the characteristics of their shopping basket in response to economic shocks. We use detailed longitudinal data and focus on within household changes in basket characteristics and proxies for shopping effort.
Relative prices, consumer preferences, and the demand for food
(with Rachel Griffith and Martin O’Connell), Oxford Review of Economic Policy (2015) 31(1): 116-130.
Shocks to world commodity prices and the depreciation of sterling led to a large increase in the price of food in the UK. It also resulted in large changes in the relative prices of different foods. We document these changes, and consider how they affected the composition of households’ shopping baskets. We isolate the impact of changes in relative food prices from variation in preferences using data on purchasing decisions made by a representative panel of British households. We show that changes in relative food prices led to a worsening in the nutritional quality of households’ shopping baskets, though this was partially mitigated by offsetting changes in preferences.
Work in Progress
Intertemporal income shifting and taxing owners of closely held businesses
(with Helen Miller and Thomas Pope)
Soda tax design
(with Martin O’Connell)