For the abstract, working paper versions and more details of each paper, please click on the bullet.
A new year, a new you? Heterogeneity and self control in food purchases
(with Laurens Cherchye, Bram De Rock, Rachel Griffith, Martin O’Connell and Frederic Vermeulen), December 2017.
We document considerable within-person (over time) variation in diet quality that is not fully explained by responses to fluctuations in the economic environment. We propose a two-selves model that provides a structural interpretation to this variation, in which food choices are a compromise between a healthy and an unhealthy self, each with well-behaved preferences. We show that the data are consistent with this model using revealed preference methods. The extent of self-control problems is higher among younger and lower income consumers, though this is overstated if we do not control for responses to fluctuations in the economic environment. Our results are intuitively related to stated attitudes on self-control.
Tax design in the alcohol market
(with Rachel Griffith and Martin O’Connell), September 2017.
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. Welfare gains from optimally varying rates are higher the more concentrated externalities are amongst heavy drinkers. A sufficient statistics approach is informative about the direction of reform, but not about optimal rates when externalities are highly concentrated.
Why do retailers advertise store brands differently across product categories?
(with Rachel Griffith and Michal Krol), January 2017.
Revise & Resubmit at the Journal of Industrial Economics.
There is divided opinion about the impact of store brands on welfare. We provide new evidence on the strategic behaviour of retailers over the pricing, advertising and positioning of store brands in the UK grocery markets. This motivates a simple Hotelling style model in which we allow both retailers and manufacturers to endogenously advertise their respective brands, accounting for the impact on retailer-manufacturer bargaining (via wholesale price setting) and downstream competition (via retail price setting). Advertising facilitates price discrimination by the retailer, which leads to higher aggregate consumer surplus than when store brands are absent from the market.
Corrective Taxation and Internalities from Food Consumption
(with Rachel Griffith and Martin O’Connell), CESifo Economic Studies (2017) ifx018.
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.
(with Peter Levell and Martin O’Connell), in The Green Budget 2016 (eds.) C. Emmersen, P. Johnson and R. Joyce.
Excise duties make a significant contribution to UK government revenues. In 2014–15, the duties levied on fuel, tobacco and alcohol raised £47 billion, comprising 7.2% of total receipts. However, the future of these taxes is uncertain. Revenues from existing duties are set to decline in coming years, and new planned and proposed regulations, such as plain packaging for cigarettes and minimum pricing for alcohol, would be likely to act to accelerate this process if enacted. At the same time, public health bodies have proposed introducing new duties on foods and beverages with high sugar contents. In this chapter, we consider the current structure of excise duties and the principles that should underpin them. We argue that current duties are not always well designed and we raise similar concerns with regard to proposed sugar taxes. Overall, there is a need for a clear long-term strategy for this part of the tax system, informed by economic principles and empirical evidence.
Work in Progress
Intertemporal income shifting: Evidence from small business owners
(with Helen Miller and Thomas Pope)
Corrective taxes and imperfect competition
(with Martin O’Connell)
Sugar consumption and temptation in the soda market
(with Rachel Griffith and Martin O’Connell)