Predicting the Effects of Sugar-Sweetened Beverage Taxes on Food and Beverage Demand in a Large Demand System
Eric A. Finkelstein,
James M. Nonnemaker,
Shawn A. Karns and
Jessica Todd ()
American Journal of Agricultural Economics, 2014, vol. 96, issue 1, 1-25
A censored Exact Affine Stone Index incomplete demand system is estimated for 23 packaged foods and beverages and a numÃ©raire good. Instrumental variables are used to control for endogenous prices. A half-cent per ounce increase in sugar-sweetened beverage prices is predicted to reduce total calories from the 23 foods and beverages but increase sodium and fat intakes as a result of product substitution. The predicted decline in calories is larger for low-income households than for high-income households, although welfare loss is also higher for low-income households. Neglecting price endogeneity or estimating a conditional demand model significantly overestimates the calorie reduction.
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:96:y:2014:i:1:p:1-25.
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