82nd International Atlantic Economic Conference

October 13 - 16, 2016 | Washington, USA

Reassessing the effect of soda taxes on body weight

Friday, October 14, 2016: 10:00 AM
Nathalie Mathieu-Bolh, Ph.D. , Economics, University of Vermont, Burlington, VT
Stephen Colagiuri, PhD, MD , University of Sydney, Camperdown, Australia
In this paper, we build a theoretical model of consumption behavior and simulate the effect of sugar-sweetened beverage (SSB) taxes on body weight. We contribute to the theoretical literature in several ways. First, we focus on the effect of SSB taxes on body weight, whereas few theoretical contributions analyze the effect of junk food taxes, and none focus on SSB taxes. Second, our model contrasts with past contributions, as it includes recent findings in the health literature, indicating that social habits and calorie awareness influence sugar-sweetened beverage consumption. Third, in contrast with the existing theoretical literature, we provide numerical simulations to assess the effect of social habits and calorie awareness on the outcome of tax policies. Fourth, while the empirical literature relies on household level data, we use behavioral and physiological differences between men and women to assess the effect of SSB taxes on their respective body weight.

Our numerical results are as follows. When social habits are taken into consideration, body weight is more responsive to taxes than if social habits are ignored. Additionally, the more aware individuals initially are of the calorie content of SSB relative to Non-SSB, the more they decrease SSB consumption, and thereby experience a larger decrease in their body weight following a tax. Thus, our results suggest that estimates relying on models without social habits or calorie consciousness might understate the potential of SSB taxes. Furthermore, the decrease in body weight is significantly larger for adult males than adult females. We find that a 20% tax on soft drinks, flavored syrups and fruit drinks would result in a weight loss of up to 6.9 Kg for the average adult male and of up to 5 Kg for the average adult female. Simulations indicate that on average, women are initially more aware of the calorie content of SSB over Non-SSB than men and more influenced by social habits. However, the difference in body weight outcomes is explained by social habits being relatively more important than low calorie awareness for men, and by the fact that men are heavier initially.