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

Céline Bonnet and Vincent Réquillart

Economics & Human Biology, 2023, vol. 51, issue C

Abstract: To assess the impact of taxation on the consumption of sugar-sweetened beverages (SSBs) most economic studies using household data 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 the demand for different categories of households. Finally, we simulate the impact of a tax policy on individual consumption. We find a high level of heterogeneity in consumption. Adults, both men and women, consume a greater quantity of SSBs than children. More importantly, for any given age category, the average consumption of SSBs increases with body mass index (BMI). Among heavy consumers of SSBs, obese and overweight people are over-represented. In France, a €0.20/l tax on SSBs might decrease sugar intake by more than 2 kg per year on average and by more than 5 kg, roughly 3 teaspoons/day, for 5% of the adult population. Moreover, overweight and obese men and women, who correspond to 41% of the adult population, represent 56% of the last five percentiles of the distribution of the variation in sugar intake. This is a key result because the objective of taxation is to decrease the consumption of individuals who are more at risk, that is those who are overweight and obese. We also show that classical method of the assessment of tax policies based on per-capita consumption underestimate the effect of the tax for obese adults by 9%. Finally, we estimate that a €0.20/l tax on SSBs might avoid about 640 deaths (about 1.6% of the considered diseases) as a consequence of the decrease in SSB consumption.

Keywords: Soft drinks; Excise tax; Differentiated products; Individual consumption (search for similar items in EconPapers)
JEL-codes: D12 H31 I18 Q18 (search for similar items in EconPapers)
Date: 2023
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Working Paper: The effects of taxation on the individual consumption of sugar-sweetened beverages (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ehbiol:v:51:y:2023:i:c:s1570677x23000588

DOI: 10.1016/j.ehb.2023.101277

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