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The effects of taxes on purchases of sugar-sweetened carbonated soft drinks: a quantile regression approach

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  • Geir Wæhler Gustavsen
  • Kyrre Rickertsen

Abstract

The consumption of large quantities of Sugar-Sweetened Carbonated Soft Drinks (SSCSD) may lead to obesity, which is associated with health problems such as diabetes, cardiac diseases and mental health problems. The effects of increasing the Value Added Tax (VAT) on purchases of SSCSD are estimated. Obesity is more likely among heavy drinkers than among light or moderate drinkers. Therefore, the effects on high- and low-purchasing households are estimated by using Quantile Regressions (QRs) on Norwegian household purchase data. Since many households did not purchase SSCSD during each survey period, censored as well as ordinary QRs are used. Our results suggest that a VAT increase from 13 to 25% will have the highest percentage effect among low-purchasing households but the absolute effect is highest among high-purchasing households. Low-purchasing households will reduce their purchases by about 5 L while the reduction is almost 20 L among high-purchasing households. However, the effects among high-purchasing households are not statistically significant from zero. A reduction of 5 L corresponds ceteris paribus to an annual reduction of about 0.3 kg of body weight.

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  • Geir Wæhler Gustavsen & Kyrre Rickertsen, 2009. "The effects of taxes on purchases of sugar-sweetened carbonated soft drinks: a quantile regression approach," Applied Economics, Taylor & Francis Journals, vol. 43(6), pages 707-716.
    • Handle: RePEc:taf:applec:v:43:y:2009:i:6:p:707-716
    DOI: 10.1080/00036840802599776
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    References listed on IDEAS

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    Cited by:

    1. Gandal Neil & Shabelansky Anastasia, 2010. "Obesity and Price Sensitivity at the Supermarket," Forum for Health Economics & Policy, De Gruyter, vol. 13(2), pages 1-19, July.
    2. Pourya Valizadeh & Shu Wen Ng, 2021. "Would A National Sugar‐Sweetened Beverage Tax in the United States Be Well Targeted?," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(3), pages 961-986, May.
    3. Härkänen, Tommi & Kotakorpi, Kaisa & Pietinen, Pirjo & Pirttilä, Jukka & Reinivuo, Heli & Suoniemi, Ilpo, 2014. "The welfare effects of health-based food tax policy," Food Policy, Elsevier, vol. 49(P1), pages 196-206.
    4. Ahmed Mohammed Alqarni, 2020. "Saudi Smokers' Behaviors After a 100% Tax Increase," International Journal of Marketing Studies, Canadian Center of Science and Education, vol. 11(1), pages 150-150, March.
    5. Gustavsen, Geir Wæhler & Rickertsen, Kyrre, 2013. "Adjusting VAT rates to promote healthier diets in Norway: A censored quantile regression approach," Food Policy, Elsevier, vol. 42(C), pages 88-95.
    6. Abdulfatah Sheikhbihi Adam & Sinne Smed, 2012. "The effects of different types of taxes on soft-drink consumption," IFRO Working Paper 2012/9, University of Copenhagen, Department of Food and Resource Economics, revised Nov 2012.
    7. Matthias Staudigel, 2012. "How do obese people afford to be obese? Consumption strategies of Russian households," Agricultural Economics, International Association of Agricultural Economists, vol. 43(6), pages 701-714, November.
    8. Cahuana-Hurtado, Lucero & Sosa-Rubi, Sandra & Rubalcava-Peñafiel, Luis & Panopoulou, Panagiota & Rodriguez-Oliveros, Guadalupe & Servan-Mori, Edson, 2013. "Understanding the heterogeneous nature of the demand for soft drinks in Mexico: why social determinants also matter," MPRA Paper 61274, University Library of Munich, Germany, revised Jun 2014.

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