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

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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.

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Acknowledgements

The authors thank Profs. Bruce A. McCarl and Ximing Wu at Texas A&M University who mentored and advised on this research as a dissertation chapter, which enabled substantial improvements in the analytical framework and design of this study. The authors are grateful for the constructive suggestions and detailed comments from the two anonymous reviewers. The views expressed herein are those of the authors and cannot be attributed to the affiliated organizations.

Data Availability

The proprietary scanner data from the grocery chain in this study is confidential and not available for sharing.

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Authors and Affiliations

  1. World Bank, Bangkok, 10330, Thailand

    Theepakorn Jithitikulchai

  2. Rudd Center for Food Policy and Obesity, University of Connecticut, Hartford, CT, USA

    Tatiana Andreyeva

  3. Department of Agricultural and Resource Economics, University of Connecticut, Storrs, CT, USA

    Tatiana Andreyeva

Authors
  1. Theepakorn Jithitikulchai
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  2. Tatiana Andreyeva
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Contributions

TA designed the concept of this study and assembled the raw microdata. TJ performed all analyses and analyzed the results. TJ wrote the main paper, and both TJ and TA discussed the results and implications and contributed to drafting the manuscript.

Corresponding author

Correspondence to Theepakorn Jithitikulchai.

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Funding

Proprietary data for this study were funded by a grant from the Economic Research Service at the US Department of Agriculture and work was supported in part by the Rudd Foundation.

Conflict of interest

Theepakorn Jithitikulchai and Tatiana Andreyeva have no conflicts of interest directly relevant to the content of this article.

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Jithitikulchai, T., Andreyeva, T. Sugar-Sweetened Beverage Demand and Tax Simulation for Federal Food Assistance Participants: A Case of Two New England States. Appl Health Econ Health Policy 16, 549–558 (2018). https://doi.org/10.1007/s40258-018-0399-1

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  • DOI: https://doi.org/10.1007/s40258-018-0399-1

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