Accounting for Product Substitution in the Analysis of Food Taxes Targeting Obesity

Zhen Miao, John C. Beghin and Helen H. Jensen

No 97927, Hebrew University of Jerusalem Archive from Hebrew University of Jerusalem

Abstract: We extend the existing literature on food taxes targeting obesity. First, we incorporate the implicit substitution between sugar and fat nutrients implied by a complete food demand system and by conditioning on how food taxes affect total calorie intake. Second, we propose a methodology that accounts for the ability of consumers to substitute leaner low-fat and low-sugar items for rich food items within the same food group. This substitution is integrated into a demand system in addition to substitution among food groups. Simulations of a tax on added sugars show that the impact of the tax on consumption patterns is understated and the effect on welfare loss overstated when abstracting from this substitution within food groups.

Keywords: Agricultural and Food Policy; Consumer/Household Economics; Demand and Price Analysis; Food Consumption/Nutrition/Food Safety (search for similar items in EconPapers)
Pages: 74
Date: 2010-12
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Persistent link: https://EconPapers.repec.org/RePEc:ags:hebarc:97927

DOI: 10.22004/ag.econ.97927

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