Empirical evidence of the efficiency and efficacy of fat taxes
literature. They argue that the most commonly proposed fat taxes, that of the composite commodity
fat taxes (CCFT), are ambiguous in their effects on obesity. Another type of fat tax, a nutrient fat tax
(NFT), is likely to reduce that amount of fat purchased, but may not be effective in the reduction of
obesity, because of nutrient substitution. The actual effects of the taxes is left to an empirical exercise/.
This study summarizes the empirical literature on fat taxes. This literature includes the CCFT and the
NFT but have different theoretical backgrounds. Some studies use a Lancaster approach to the study
of NFT (e.g. Smed, et al. (2007)). Others use a Theil/Nelson “inverse hedonic” approach (e.g. Xu, (2011)
Clark and Levadahl (2005)) to the estimation of CCFTs. Still others use a “fixed proportions” approach
to the estimation of a NFT, where the fat elasticity is a fixed constant of the overall elasticity based on
an untested assumption that consumers cannot adjust the amount of nutrients they purchase when
prices for the composite commodity change (e.g. Chouinard, et al. (2005) and Alais et al. (2010)). Finally
there are also studies that calculate a direct elasticity of the price of a nutrient as it relates to body
mass index (BMI) (e.g. Clark, Xu and Law (2012)). From a review of this literature we conclude that the
CCFT is unlikely to have an impact on obesity and could be more harmful than good. Even for the fixed
proportion model, the CCFT elasticity is small. The NFT shows more promise, but even in this case, there
are substitutions from fat to other potentially equally unhealthy nutrients the could mitigate some of
the effects of the NFT. Also, the elasticity calculations do not include possible producers’ reactions that
may mitigate the impacts of the NFT.
References
Allais, O.,P. Bertail and V. Nichele, (2010). The effects of a fat tax on French Household’s Purchases: A
nutritional approach. Amercan Journal of Agricultural Economics. 92(1):228-245.
Chouinard, H.H., D.E. Davis, J.T. LaFrance and J. M. Perloff. (2005). The effects of a fat tax on Dairy
Products. Working Paper. Department of Food and Resource Economics. University of California at
Berkeley.
Clark, J.S. and O.L. Dittrich, (2010). Alternative Fat Taxes to Control Obesity. International Advances in
Economic Research 16(4): 388-394.
Clark, J.S. and J. W. Levedahl (2006), Will fat taxes cause Americans to become fatter? Some evidence
of US meats. Selected paper session of the International Association of Ahgricultural Economists, Gold
Coast Australia.
Clark, J.S. , C. Xu and S. Law. (2012) Socioeconomic and health determinants of Canadians’ Body Mass
Index. Working Paper. Department of Business and Social Science, Dalhousie University.
Smed, S., J.D. Jensen, and S. Denver, (2007). Socio-economic characteristics and the effect of taxation
as a health policy instrument, Food Policy. 32 (5-6): 624-39.
Xu, C. (2011). Consumers’ Decisions on Calories, Fat and Carbohydrates with respect to food prices and
expenditures. M.A. Thesis, Department of Economics, Dalhousie University.