Social‐Optimal Household Food Waste: Taxes and Government Incentives

In 2010, 21% of the total food available for consumption in the United States was wasted at the household level. In response to this waste, a number of counties and U.S. localities have instituted policies (disposal taxes) directed toward reducing this waste. However, currently there is no federal food‐waste disposal tax. The aim of this paper is to establish a theoretical foundation for household food waste, and based on this theory, to determine the social‐optimal food‐waste (disposal) tax, along with a government incentive. The theory unravels the interrelation between social food insecurity and external environmental costs, which is not generally considered by households when they waste food. A social‐optimal disposal tax and government incentive involve Pigovian mechanisms and governmental expenditures. For a zero level of food waste, the social‐optimal disposable tax and government incentive approach infinity.