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A Reconsideration of the Sugar Sweetened Beverage Tax in a Household Production Model

Di Xiang, Lue Zhan and Massimo Bordignon ()

No 7087, CESifo Working Paper Series from CESifo Group Munich

Abstract: We study the impact of a hypothetical tax on sugar - sweetened beverages (SSBs) on the US households’ nutrients purchase, welfare change, and health benefit. Differently from the traditional approach, Food at Home(FAH) is here defined as a “home” good instead than a market good and consumers’ demands derived under the assumption that households maximize utility subject to both a money and a time constraint. The model is estimated by using an incomplete approximate Exact Affine Stone Index (EASI) demand system on a data set built by merging the most recent waves of the US consumer expenditure and time use surveys. Results show that a SSB tax would be much more effective in decreasing household nutrients purchase than it would appear by estimating a model neglecting time costs in home food production. A tax induced increased in SSB price by 20% is predicted to decrease the per capita energy purchase by 29.17 kcal/day. The annual health benefits of the tax, measured only in terms of reduced household medical expenditure, would overcome estimated welfare losses by more than $400 million.

Keywords: sugar-sweetened beverage tax; obesity; household production (search for similar items in EconPapers)
JEL-codes: D12 D13 I18 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr and nep-hea
Date: 2018
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