The Hazard of Tanning: Intertemporal Choices, Social Status, and Corrective Policy
Independent thesis Advanced level (degree of Master (One Year)), 10 credits / 15 HE creditsStudent thesis
Skin cancer is the most rapidly increasing cancer form today, our changed tanning behavior is often argued to be the main source of this development. Today a tanned skin is often associated with good health and status. If tanning is a status good and individuals have positional preferences for a suntan our own tanning-decision will create negative positional externalities on others, causing us to over-consume artificial tanning sessions. But why is it that we keep exposing ourselves to UV-light even though we know how dangerous it can be to us? The similarities between tanning and smoking are rather straightforward. Not only do studies indicate that frequent tanners show addictive-like behavior, the predominant similarity is the postponed health costs, in this case risk of skin cancer. An individual’s tanning choice is hence based on current benefits and discounted future health costs. Individuals that have present-biased preferences for immediate gratification will consume tanning sessions in a way that the future self will disagree with. Giving too little weight to future health cost will thus create internalities on the future self.
This study analyses optimal taxation on artificial tanning, correcting for behavioral failures generated from time-inconsistent preferences as well as the externalities caused by positional preferences for a suntan. The results indicate that sizing the tan tax equal to the health costs overlooked and the marginal externalities created generates over all improvement of welfare.
Place, publisher, year, edition, pages
IdentifiersURN: urn:nbn:se:umu:diva-122852OAI: oai:DiVA.org:umu-122852DiVA: diva2:941841
Master´s Programme in Economics