Sugar-Sweetened Beverage Demand and Tax Simulation for Federal Food Assistance Participants: A Case of Two New England States

Theepakorn Jithitikulchai and Tatiana Andreyeva

Applied Health Economics and Health Policy, 2018, vol. 16, issue 4, No 11, 549-558

Abstract: Abstract Background Excessive consumption of sugar-sweetened beverages is a major concern in the efforts to improve diet and reduce obesity in USA, particularly among low-income populations. One of the most commonly proposed strategies to reduce sugar-sweetened beverage consumption is increasing beverage prices through taxation. Objective The objective of this study was to evaluate whether and how price-based policies could reduce sugar-sweetened beverage consumption among participants in the federal Supplemental Nutrition Assistance Program. Methods Using point-of-sale data from a regional supermarket chain (58 stores), we estimated the responsiveness of demand to sugar-sweetened beverage price changes among Supplemental Nutrition Assistance Program-participating families with young children. Own-price and cross-price elasticities for non-alcoholic beverages were estimated using a Quadratic Almost Ideal Demand System model. Results The study found evidence that a tax-induced sugar-sweetened beverage price increase would reduce total sugar-sweetened beverage purchases among Supplemental Nutrition Assistance Program participants, who were driven by purchase shifts away from taxed sodas and sports drinks to non-taxed beverages (bottled water, juice, milk). The substitution of non-taxed caloric beverages decreases the marginal effects of the sugar-sweetened beverage tax, yet the direct tax effects are large enough to reduce the overall caloric intake, with the average net reduction in monthly calories from sugar-sweetened beverages estimated at around 8% for a half-cent per ounce tax and 16% for a one cent per ounce tax. Conclusion A beverage price increase in the form of an excise tax would reduce sugar-sweetened beverage consumption and increase healthier beverage purchases among low-income families.

JEL-codes: D12 H2 I18 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s40258-018-0399-1

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