How Well Targeted are Soda Taxes?

90 Pages Posted: 12 Dec 2017 Last revised: 4 Feb 2019

See all articles by Pierre Dubois

Pierre Dubois

University of Toulouse 1 - Toulouse School of Economics (TSE)

Rachel Griffith

Institute for Fiscal Studies (IFS); University of Manchester; Centre for Economic Policy Research (CEPR)

Martin O'Connell

Institute for Fiscal Studies (IFS)

Date Written: December 2017

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: discrete choice demand, Pass-Through, preference heterogeneity, soda tax

JEL Classification: D12, H31, I18

Suggested Citation

Dubois, Pierre and Griffith, Rachel and O'Connell, Martin, How Well Targeted are Soda Taxes? (December 2017). CEPR Discussion Paper No. DP12484. Available at SSRN: https://ssrn.com/abstract=3086139

Pierre Dubois (Contact Author)

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

Rachel Griffith

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London WC1E 7AE
United Kingdom
+44 20 7291 4800 (Phone)
+44 20 7323 4780 (Fax)

University of Manchester ( email )

Arthur Lewis Building
Oxford Road
Manchester, M13 9PL
United Kingdom

HOME PAGE: http://www.ifs.org.uk/people/profile?id=37

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Martin O'Connell

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

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