TITLE:
Indoor Tanning, Sunbathing, and the Hazard of Skin Cancer: The Effect of the Tan Tax
AUTHORS:
Gideon Yaniv, Erez Siniver
KEYWORDS:
Indoor Tanning, Sunbathing, Skin Cancer, Tan Tax
JOURNAL NAME:
Theoretical Economics Letters,
Vol.5 No.1,
January
30,
2015
ABSTRACT: In July2010, a10 percent federal sales tax on indoor tanning, known as the tan tax, went into
effect. Applauding the imposition of the new tax, the American Academy of
Dermatology (AAD) foresees that by discouraging indoor tanning, the tan tax
will significantly reduce the risk of skin cancer and consequently the future
costs of its treatment, currently amounting to $1.8 billion each year. Recognizing, however, that an alternative to
indoor tanning may be the riskier practice of sunbathing, the present paper offers a rational-choice model for
addressing the individual’s indoor and outdoor tanning decisions, which
is applied to examining his or her response to the imposition of a tan tax and the consequent effect on the
hazard of developing skin cancer. The paper challenges the AAD’s
forecast, identifying conditions under which a tan tax will rather exacerbate
the hazard of skin cancer.