Working paper

The effects of taxation on the individual consumption of sugar-sweetened beverages

Céline Bonnet, and Vincent Réquillart

Abstract

When assessing the impact of taxation on the consumption of sugar-sweetened beverages (SSBs), most studies consider the average consumer. Individual consumption is, however, very heterogeneous. In this paper, we propose a three-step methodology to evaluate the impact of SSB taxation on individual consumption. First, we use a disaggregation method to recover individual consumption from observed household consumption. Second, we estimate a matrix of price elasticities of demand. Third, we simulate the impact of a tax policy on individual consumption. We find high level of heterogeneity in consumption. Adults, both men and women, consume a greater quantity of SSBs than children. For any given age category, the average consumption of SSBs increases with body mass index. Among heavy consumers of SSBs, obese and overweight people are over-represented. In France, a e0.20/l tax on SSBs might decrease sugar intake (due to SSBs) by 0.8 kg per year on average and by more than 2 kg for 5% of the adult population; the decrease being greater for an obese adult than a normal weight adult. For children, the decrease in sugar intake is about 0.25 kg on average and greater than 0.6 kg per year for about 5% of children.

Keywords

soft drinks; excise tax; differentiated products; individual consumption;

JEL codes

  • D12: Consumer Economics: Empirical Analysis
  • H31: Household
  • I18: Government Policy • Regulation • Public Health
  • Q18: Agricultural Policy • Food Policy

Reference

Céline Bonnet, and Vincent Réquillart, The effects of taxation on the individual consumption of sugar-sweetened beverages, TSE Working Paper, n. 16-638, April 2016, revised June 2018.

See also

Published in

TSE Working Paper, n. 16-638, April 2016, revised June 2018