Working paper

How well targeted are soda taxes?

Pierre Dubois, Rachel Griffith, and Martin O'Connell

Abstract

Soda taxes aim to reduce excessive sugar consumption. Their effectiveness depends on whether they target individuals for whom the harm of consumption is largest. We estimate demand and account for supply-side equilibrium pass-through. We exploit longitudinal data to estimate individual preferences, which allows exible heterogeneity that we relate to a wide array of individual characteristics. We show that soda taxes are effective at targeting young consumers but not individuals with high total dietary sugar; they impose the highest monetary cost on poorer individuals, but are unlikely to be strongly regressive if we account for averted future costs from over consumption.

Keywords

preference heterogeneity; discrete choice demand; pass-through; soda tax;

JEL codes

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

Reference

Pierre Dubois, Rachel Griffith, and Martin O'Connell, How well targeted are soda taxes?, TSE Working Paper, n. 17-868, December 2017, revised January 2019.

See also

Published in

TSE Working Paper, n. 17-868, December 2017, revised January 2019