The Effect of Prices on Nutrition: Comparing the Impact of Product- and Nutrient-Specific Taxes
Matthew Harding () and
Michael Lovenheim ()
No 19781, NBER Working Papers from National Bureau of Economic Research, Inc
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 not higher. A sugar tax in particular is a powerful tool to induce healthier nutritive bundles among consumers.
JEL-codes: C33 H2 I12 I19 (search for similar items in EconPapers)
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Published as Harding, Matthew & Lovenheim, Michael, 2017. "The effect of prices on nutrition: Comparing the impact of product- and nutrient-specific taxes," Journal of Health Economics, Elsevier, vol. 53(C), pages 53-71.
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Journal Article: The effect of prices on nutrition: Comparing the impact of product- and nutrient-specific taxes (2017)
Working Paper: The Effect of Prices on Nutrition: Comparing the Impact of Product- and Nutrient-Specific Taxes (2014)
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