Sin Taxes: Too Paternalistic or Promoting Self-Control?Victoria ZuzeloEcon 330: Behavioral EconomicsEric Schulz3/5/14I. INTRODUCTION Behavioral economics is a relatively new field that challenges the basic assumptions of the standard economic model. It is reiterated that people are not entirely rational actors, are not completely selfish and do not always maintain consistent preferences over time (Schulz Lecture). These notions have the potential to have a radical impact on how economic policy is executed in the United States because they can change politicians' understanding of how people act. One of the main areas of influence of behavioral economics is changing how taxes are implemented and what objects are taxed. Taxation is essential to the survival of government, and taxes have the power to create (accounting for welfare) and to destroy (excessive taxes on alcohol and tobacco). This article will focus on the destructive capacity of taxes, specifically how taxes can be used to prevent activities deemed unhealthy or wrong. In particular, this article will examine “sin taxes” and their effects through the lens of behavioral economics. Sin taxes are a type of excise tax, which are levied on immoral or socially harmful substances such as alcohol, tobacco, gambling, and unhealthy drinks. Although sin taxes have been the subject of heated debate when it comes to finding ways to finance the rising costs of health care, the concept of a sin tax is nothing new in the United States. However, its purpose has changed over time. Originally, sin taxes were predominantly “[…] enacted as emergency wartime measures, and were repealed at the end of hostilities” (Williams & Christ 2009), while they are now used to curb forbidden habits. The first thing regarding paper and sugary foods could be counseling to help them understand what drives them to smoke or eat unhealthily. Furthermore, I believe that subsidies for healthier alternatives are also an option more in line with the libertarian paternalistic way of thinking because it does not eliminate choices. For example, the government could provide subsidies to vapor cigarette companies if FDA tests showed they were healthier than cigarettes, which would make them significantly cheaper than smoking tobacco cigarettes. However, behavioral economics, psychology, and neuroscience can undoubtedly help guide government policies in helping those with self-control issues in ways never seen before. The standard economic model is not sufficient when working with addictive substances because it is clear that the consumer is not acting rationally.