Written by: Nathan Warner on October 22, 2009.

Charging those with unhealthy habits is more fair than any alternative

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One idea being tossed around in the current chaotic debate on health care is to instate a sin tax on unhealthy behaviors.

This idea is not new it has been endorsed and legislated worldwide for things like smoking and gasoline use. These Pigovian taxes (after economist Arthur Pigou) are intended to correct negative market externalities, unwanted consequences of economic activity that are experienced by unrelated third parties and in inefficient markets.

For example, all of humanity is affected by the environmental degradation inflicted by use of carbon fuels. But the incentive to drive less and thus contribute to less air pollution is, on the aggregate nonexistent.

There is no incentive for any single individual to drive less it is too much of an individual sacrifice. And it simply wont make a difference if the rest of society doesnt also change driving habits.

To rectify this, a high tax could be levied on gasoline. This would not explicitly prohibit driving but would decrease the total number of hours spent driving across society, thus lessening carbon emissions.

In other words, the externality would be corrected. Drivers would be made to internalize the full consequences of their decisions even those that affect others.

The same concept has been suggested regarding other sin behaviors actions that are entirely logical at the individual level but force high costs on unrelated parties who have no influence or choice on the action.

Read more from the original source:

Health care reform bill needs sin taxes