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The effect of prices on nutrition: Comparing the impact of product- and nutrient-specific taxes

Matthew Harding () and Michael Lovenheim ()

Journal of Health Economics, 2017, vol. 53, issue C, 53-71

Abstract: This paper provides an analysis of the role of prices in determining food purchases and nutrition using very detailed transaction-level observations for a large, nationally-representative sample of US consumers over the period 2002–2007. Using product-specific nutritional information, we develop a new method of partitioning the product space into relevant nutritional clusters that define a set of nutritionally-bundled goods, which parsimoniously characterize consumer choice sets. We then estimate a large utility-derived demand system over this joint product-nutrient space that allows us to calculate price and expenditure elasticities. Using our structural demand estimates, we simulate the role of product taxes on soda, sugar-sweetened beverages, packaged meals, and snacks, and nutrient taxes on fat, salt, and sugar. We find that a 20% nutrient tax has a significantly larger impact on nutrition than an equivalent product tax, due to the fact that these are broader-based taxes. However, the costs of these taxes in terms of consumer utility are only about 70 cents per household per day. A sugar tax in particular is a powerful tool to induce healthier nutritive bundles among consumers.

Keywords: Food and nutrient demand; SSBs; Food taxes; Purchasing environments; QUAIDS (search for similar items in EconPapers)
JEL-codes: I12 I19 C33 (search for similar items in EconPapers)
Date: 2017
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Related works:
Working Paper: The Effect of Prices on Nutrition: Comparing the Impact of Product- and Nutrient-Specific Taxes (2014) Downloads
Working Paper: The Effect of Prices on Nutrition: Comparing the Impact of Product- and Nutrient-Specific Taxes (2014) Downloads
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