Habit Formation and Demand for Sugar‐Sweetened Beverages

Abstract

Using scanner data, we estimated demand for nine nonalcoholic beverages under habit formation. We found strong evidence for habit formation. Although demand for sugar-sweetened beverages by lowincome households is less elastic to own-price changes compared with high-income households, there is evidence that high-income households consider beverages to be more substitutable than low-income households do. A half-cent per ounce tax on store-purchased sugar-sweetened beverages will result in a moderate reduction in consumption of sugar-sweetened beverages for both income strata. Because of habit formation, long-run national tax revenue from a sugar-sweetened beverage tax is about 15 to 20% lower than short-run revenue.

Individual, Social, Economic, and Environmental Model: A Paradigm Shift for Obesity Prevention

“…Many studies have dealt with the implications of taxes on energy dense snack foods and soft drinks [62,[65][66][67]. In the US, there are about 19 states that levy taxes on soft drinks, candy, chewing gum, or snack foods (potato chips, pretzels, and others) [62].…”

Taxing Sugar-Sweetened Beverages: Not a “Holy Grail” but a Cup at Least HalfComment on “Food Taxes: A New Holy Grail?”

“…Higher-income individuals would pay $18.84. Another similar study found a SSB tax to be similarly regressive but, again, of small magnitude (28). Because low income individuals are projected to lose slightly more weight from a SSB tax than higher income individuals, this income burden may be more than abated by health improvements.…”

“…Much evidence demonstrates the effect, or likely effect, of taxes on SSB consumption (3,(22)(23)(24)(25)(26)(27)(28)(29). Several studies, most focused on soda/soft drinks, have documented associations between higher SSB prices and lower consumption.…”

“…Several studies, most focused on soda/soft drinks, have documented associations between higher SSB prices and lower consumption. Authors have utilized various methods, including observational data on food prices and consumption (22,26), household survey data on food purchases (23,(27)(28)(29), and experimental studies (25). A 2009 systematic review of food price elasticities found a price elasticity of demand of -0.79 (95% CI 0.33, 1.24) for soft drinks, estimated from 14 different studies.…”

“…This elasticity suggests that for every 10% increase in the price of soft drinks, sales would decline by 7.9%. Additional studies have found very similar elasticities (22,25) or even higher responsiveness to price (i.e., less inelastic demand) (3,23,(27)(28)(29). Two recent studies conservatively projected calorie reductions per capita from SSB taxes, accounting for potential substitutions to other beverages and foods.…”