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The effectiveness of taxes in decreasing candy purchases

Kyle Hoy () and Douglas H. Wrenn

Food Policy, 2020, vol. 97, issue C

Abstract: We use candy purchase data at the household level to analyze changes in candy purchases due to Colorado’s candy tax. Colorado is one of the many states that exempts candy containing flour from their candy tax. To do this, we construct a dataset of monthly household taxed and tax-exempt candy purchases for the years 2009 and 2010 for the Denver, CO and Omaha, NE metros. Difference-in-differences estimates imply that Colorado’s candy tax led to a decrease in taxed candy purchases of at least 11.2%, which would translate into a reduction of household body weight of at least one pound during the first year the tax is in effect. Conversely, we find no effect on the purchase of tax-exempt candy.

Keywords: Candy; Taxes; Sin tax; Difference-in-differences (search for similar items in EconPapers)
JEL-codes: H71 I1 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.foodpol.2020.101959

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