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The distributional consequences of a fiscal food policy: evidence from the UK

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  • Richard Tiffin
  • Matthew Salois

Abstract

The literature on fiscal food policies focuses on their effectiveness in altering diets and improving health, while this paper focuses on their welfare costs. A formal welfare economics framework is developed to calculate the combined individualistic and distributional impacts of a tax-subsidy. Distributional characteristics of foods targeted by a tax tend to be concentrated in lower-income households. Further, consumption of fruit and vegetables tends to be concentrated in higher-income households; therefore, a subsidy on such foods increases regressivity. Aggregate welfare changes that result from a fiscal food policy are found to range from an increase of 1.41 per cent to a reduction of 2.06 per cent according to whether a subsidy is included, the degree of inequality aversion, and whether substitution among foods is allowed.

Suggested Citation

  • Richard Tiffin & Matthew Salois, 2015. "The distributional consequences of a fiscal food policy: evidence from the UK," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 42(3), pages 397-417.
    • Handle: RePEc:oup:erevae:v:42:y:2015:i:3:p:397-417.
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    File URL: http://hdl.handle.net/10.1093/erae/jbu027
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    Cited by:

    1. Saha, Sanjib & Nordström, Jonas & Scarborough, Peter & Thunström, Linda & Gerdtham, Ulf-G., 2021. "In search of an appropriate mix of taxes and subsidies on nutrients and food: A modelling study of the effectiveness on health-related consumption and mortality," Social Science & Medicine, Elsevier, vol. 287(C).
    2. Caputo, Vincenzina & Lusk, Jayson L., 2022. "The Basket-Based Choice Experiment: A Method for Food Demand Policy Analysis," Food Policy, Elsevier, vol. 109(C).

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