The Impact of Soda Sales Taxes on Consumption: Evidence from Scanner Data

30 Pages Posted: 13 Mar 2014

See all articles by Francesca Colantuoni

Francesca Colantuoni

University of Massachusetts at Amherst - College of Natural Resources & the Environment - Department of Resource Economics

Christian Rojas

University of Massachusetts at Amherst - College of Natural Resources & the Environment - Department of Resource Economics

Date Written: March 11, 2014

Abstract

Scientific evidence on the effect of sugar consumption on obesity has propelled policy makers in several states across the U.S. to propose the imposition of a tax on soft drinks sales. In this paper, we look at the effect of two tax events: a 5.5% sales tax on soft drinks imposed by the state of Maine in 1991, and a 5% sales tax on soft drinks levied in Ohio in 2003. We investigate this question by using sales data collected by scanner devices in the two states where soda taxes where enacted as well as on neighboring states. We employ a difference-in-difference matching estimator (DIDM) that, in our setting, permits the comparison among treatment and control groups based on brand identity. Results suggest that neither sales tax had a statistically significant impact on the consumption of soft drinks. This finding is robust to several alternative specifications.

Keywords: obesity, taxation, soft drinks, differentiated products

JEL Classification: D12, H22, C90, L66

Suggested Citation

Colantuoni, Francesca and Rojas, Christian, The Impact of Soda Sales Taxes on Consumption: Evidence from Scanner Data (March 11, 2014). Available at SSRN: https://ssrn.com/abstract=2407591 or http://dx.doi.org/10.2139/ssrn.2407591

Francesca Colantuoni

University of Massachusetts at Amherst - College of Natural Resources & the Environment - Department of Resource Economics ( email )

Stockbridge Hall
80 Campus Center Way
Amherst, MA 01003-9246
United States

Christian Rojas (Contact Author)

University of Massachusetts at Amherst - College of Natural Resources & the Environment - Department of Resource Economics ( email )

Stockbridge Hall
80 Campus Center Way
Amherst, MA 01003-9246
United States

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