There is, however, an altogether different argument for these taxes: that when someone consumes such goods, he does impose a negative externality — on the future version of himself. In other words, the person today enjoys the consumption, but the person tomorrow and every day after pays the price of increased risk of illness.
This raises an intriguing question: To what extent should we view the future versions of ourselves as different people from ourselves today?
Corrections sees this as a theoretical possibility, but one that does not hold in reality. If individuals feel altruism, a love of others, then surely most feel a sense of philauty, a love of self. In such a case, we should expect to see transfers from individuals-now to individuals-tomorrow as much, or more, than we should see consanguineous transfers.
However, there is a deeper, Stiglarian point to be made here. All the necessary conditions for the Coase Theorem to hold are present, as far as Corrections can discern. There is no problem of enforcement, negotiations, or property rights. An individual will reach a Pareto optimal outcome without government intervention. They will be capable of bargaining with themselves in the future.
Furthermore, most individuals save. For individuals who are convinced that Americans do not save, net national savings (roughly adjusted for inflation to 2010 dollars) is depicted below (click to enlarge).
Before Professor Mankiw's idea is accepted, it must be explained why most individuals save, if individuals tomorrow are distinct entities from individuals today. Should this be counted as charity? Given that most save, if an individual knew that their future-self valued health at more than their now-self valued soda, they should simply have their future-self "pay" them to not drink soda by saving less--an efficient, Coaseian transfer. Corrections conjectures that Professor Mankiw's idea is not robust to these considerations.
Addendum: Corrections now recognizes that our point is robust even if an individual is not saving, so long as he can go into debt that his future-self must pay off. That is, the presence of savings is not even a necessary condition for Mankiw's point to collapse, as we first suggested.