The impact of taxation and signposting on the purchase of breakfast cereals and soft drinks

Résumé

We present two experimental studies, one with university students in a controlled laboratory environment (n = 200) and one with a nationally representative sample (n = 1,000), where consumers were asked to make real purchases within an online supermarket platform. The studies captured the effect of price changes, and of the signposting of such changes, for breakfast cereals and soft drinks. While the dataset with university students is less noisy, the overall finding is that taxes are an effective means of altering food purchasing, with a 20% rate being sufficient in our nationally representative sample to make a significant impact if (and only if) the tax is signposted. Signposting represents a complementary “nudge” policy that could enhance the impact of the tax, though its effectiveness depends on the product category. We control for the feeling of having earned the budget with which to make purchases, and for compensation effects between online shopping and natural shopping decisions. Authors: D.J. Zizzo, M. Parravano, R. Nakamura, S. Forwood and M. Suhrcke