The effect of soda taxes beyond beverages in Philadelphia

Health Economics

48 Pages Posted: 18 Mar 2021 Last revised: 18 Aug 2022

Date Written: July 18, 2022

Abstract

Soda taxes are implemented in several cities across the US with the aim of reducing sugar intake from sugar sweetened beverages (SSBs). Sugar is linked to obesity and to higher risk of diabetes and cardiovascular conditions. Sodas are targeted with these taxes since they are the main source of sugar for consumers in the US. In presence of potential substitutes, the policy can be undermined by consumers changing their sources of sugar. We examine the heterogeneous effects of the 2017 Philadelphia soda tax on purchases of other items containing sugar.

We present an empirical evaluation focusing on the potential substitution towards additional sugary foods in Philadelphia and counties bordering Philadelphia. We find an increase in sugar from purchases of sweetened foods of about 4.3% following the introduction of the tax in Philadelphia and of 3.7% in the neighboring localities. The substitution to sugary foods in Philadelphia offsets 19% of the decrease of sugar from SSBs. Additionally, we find that the substitution offsets 37% of the decrease of sugar from SSBs when including counties bordering Philadelphia. These results suggest that while SSB taxes might be effective at lowering consumption of SSBs, substitution patterns may limit the effectiveness of the tax to reduce overall sugar intake.

Keywords: Soda Taxes, Taxation and Behavior, Local Governments, Health Policy

JEL Classification: H21, H22,H23, H71,H75,I12, I14, I18

Suggested Citation

Lozano-Rojas, Felipe and Carlin, Patrick, The effect of soda taxes beyond beverages in Philadelphia (July 18, 2022). Health Economics, Available at SSRN: https://ssrn.com/abstract=3712719 or http://dx.doi.org/10.2139/ssrn.3712719

Felipe Lozano-Rojas (Contact Author)

University of Georgia ( email )

Baldwin Hall, 355 S Jackson St
204
Athens, GA 30602
United States
812 9296717 (Phone)

HOME PAGE: http://felipelozanorojas.com

Patrick Carlin

Indiana University

107 S Indiana Ave
100 South Woodlawn
Bloomington, IN 47405
United States

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