How do consumers respond to “sin taxes”? New evidence from a tax on sugary drinks.

Eleonora Fichera, Toni Mora, Beatriz Lopez-Valcarcel, David Roche

Research output: Contribution to journalArticlepeer-review

Abstract

It is unclear what the effects of taxes on sugar sweetened beverages (SSBs) are on consumer behaviour and which consumers may be affected the most. We evaluate the effect of the SSB tax introduced in Catalonia (but not in the rest of Spain) in May 2017 using loyalty card data of monthly purchases by 900,000 households from May 2016 to April 2018. Using a Difference-in-Differences approach, we study the SSB tax effect on the purchased quantity of beverages and sugar. Our results suggest a reduction in purchases of taxed beverages and a small increase in purchases of untaxed beverages. Households have substituted taxed beverages with their lower sugar (untaxed) counterparts. This has led to a 2.2% overall reduction in sugar purchases from beverages. Our study implies that although sin taxes moderately change consumer behaviour, a combination of different policies would be required to tackle obesity.
Original languageEnglish
Article number113799
JournalSocial Science and Medicine
Volume274
Early online date25 Feb 2021
DOIs
Publication statusPublished - 1 Apr 2021

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