Working Paper: CEPR ID: DP12484
Authors: Pierre Dubois; Rachel Griffith; Martin O'Connell
Abstract: Soda taxes aim to reduce excessive sugar consumption. Their effectiveness depends on whether they target individuals for whom the harm of consumption is largest. We study individual level purchases made on-the-go. We estimate demand and account for supply-side equilibrium pass-through. We exploit longitudinal data to estimate individual preferences, which allows flexible heterogeneity that we relate to key individual characteristics. We show that soda taxes are relatively effective at targeting young and poor consumers but not individuals with high total dietary sugar; they are unlikely to be strongly regressive especially if we account for averted future costs from over consumption.
Keywords: preference heterogeneity; discrete choice; demand; passthrough; soda tax
JEL Codes: D12; H31; I18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| soda taxes (H71) | sugar consumption reduction for young consumers (D18) |
| soda taxes (H71) | sugar consumption reduction for low-income households (D18) |
| soda taxes (H71) | sugar consumption reduction for individuals aged 13-21 (D18) |
| soda taxes (H71) | less effective for individuals with high total dietary sugar (L66) |
| soda taxes (H71) | higher monetary costs for poorer individuals (H53) |
| reduced sugar consumption (D18) | offset negative welfare impacts of soda taxes (H23) |
| soda taxes (H71) | targeting specific demographics (R20) |