IDEAS home Printed from https://ideas.repec.org/a/plo/pone00/0205931.html
   My bibliography  Save this article

Own-price, cross-price, and expenditure elasticities on sugar-sweetened beverages in Guatemala

Author

Listed:
  • Violeta Chacon
  • Guillermo Paraje
  • Joaquin Barnoya
  • Frank J Chaloupka

Abstract

Background: The obesity epidemic is spreading rapidly in Guatemala, a low/middle income country still struggling with undernutrition. Sugar sweetened beverages (SSBs) consumption is strongly associated with overweight, obesity, and non-communicable diseases. In Guatemala, SSBs are readily available and consumption is high, particularly among adolescents. SSB taxes have been proposed as a cost-effective way to reduce consumption and generate revenues for public health, as has been demonstrated in several countries around the world. Objective: To estimate the price, expenditure, quality, and cross-price elasticity of beverage demand using household survey data. Method: We conducted a secondary analysis on the 2014 Guatemala Living Conditions National Survey that includes national representative household data on expenditure. Own price, expenditure, quality, and cross-price elasticities of milk, soft drinks, packaged juices, and bottled water were estimated using Deaton’s Almost Ideal Demand System (AIDS), controlling for goods’ quality. Household characteristics and beverage expenditure are summarized for urban and rural locations using descriptive statistics. Results: Positive expenditure on soft drinks was highest (50.9% of households). Positive expenditure on bottled water was next for urban households (43.8%) and lowest for rural households (10.8%). Own-price elasticities for all beverages are negative and statistically significant. Own-price elasticity of soft drinks is -1.39, suggesting that with a 10% increase in price, consumption would decrease by 13.9%. Expenditure elasticity for soft drinks (0.99) suggests that a 10% household expenditure increase would result in a 9.9% increase in demand. Milk (0.07) and soft drinks (0.07) have positive quality elasticity implying that, as household total expenditure increases, the quality of these beverages, measured by their unit values, also increases. Conclusion: Soft drink demand is highly sensitive to changes in prices, suggesting that SSB taxes could significantly reduce consumption, which, in turn, could contribute to curbing the overweight/obesity epidemic.

Suggested Citation

  • Violeta Chacon & Guillermo Paraje & Joaquin Barnoya & Frank J Chaloupka, 2018. "Own-price, cross-price, and expenditure elasticities on sugar-sweetened beverages in Guatemala," PLOS ONE, Public Library of Science, vol. 13(10), pages 1-12, October.
    • Handle: RePEc:plo:pone00:0205931
    DOI: 10.1371/journal.pone.0205931
    as

    Download full text from publisher

    File URL: https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0205931
    Download Restriction: no
    File URL: https://journals.plos.org/plosone/article/file?id=10.1371/journal.pone.0205931&type=printable
    Download Restriction: no
    File URL: https://libkey.io/10.1371/journal.pone.0205931?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Deaton, Angus, 1987. "Estimation of own- and cross-price elasticities from household survey data," Journal of Econometrics, Elsevier, vol. 36(1-2), pages 7-30.
    2. Guillermo Paraje, 2016. "The Effect of Price and Socio-Economic Level on the Consumption of Sugar-Sweetened Beverages (SSB): The Case of Ecuador," PLOS ONE, Public Library of Science, vol. 11(3), pages 1-13, March.
    3. Jeffrey Grogger, 2017. "Soda Taxes And The Prices of Sodas And Other Drinks: Evidence From Mexico," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(2), pages 481-498.
    4. Chen Zhen & Eric A. Finkelstein & James M. Nonnemaker & Shawn A. Karns & Jessica E. Todd, 2014. "Predicting the Effects of Sugar-Sweetened Beverage Taxes on Food and Beverage Demand in a Large Demand System," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(1), pages 1-25.
    5. Deaton, Angus, 1988. "Quality, Quantity, and Spatial Variation of Price," American Economic Review, American Economic Association, vol. 78(3), pages 418-430, June.
    6. Colen, L. & Melo, P.C. & Abdul-Salam, Y. & Roberts, D. & Mary, S. & Gomez Y Paloma, S., 2018. "Income elasticities for food, calories and nutrients across Africa: A meta-analysis," Food Policy, Elsevier, vol. 77(C), pages 116-132.
    7. Angus Deaton, 1991. "Price Elasticities from Survey Data: Extensions and Indonesian Results," International Economic Association Series, in: Marc Nerlove (ed.), Issues in Contemporary Economics, chapter 10, pages 253-283, Palgrave Macmillan.
    8. G. Emmanuel Guindon & Arindam Nandi & Frank J. Chaloupka, IV & Prabhat Jha, 2011. "Socioeconomic Differences in the Impact of Smoking Tobacco and Alcohol Prices on Smoking in India," NBER Working Papers 17580, National Bureau of Economic Research, Inc.
    9. Delipalla, Sophia & O'Donnell, Owen, 2001. "Estimating tax incidence, market power and market conduct: The European cigarette industry," International Journal of Industrial Organization, Elsevier, vol. 19(6), pages 885-908, May.
    10. Colchero, M.A. & Salgado, J.C. & Unar-Munguía, M. & Hernández-Ávila, M. & Rivera-Dommarco, J.A., 2015. "Price elasticity of the demand for sugar sweetened beverages and soft drinks in Mexico," Economics & Human Biology, Elsevier, vol. 19(C), pages 129-137.
    11. Gitanjali M Singh & Goodarz Danaei & Farshad Farzadfar & Gretchen A Stevens & Mark Woodward & David Wormser & Stephen Kaptoge & Gary Whitlock & Qing Qiao & Sarah Lewington & Emanuele Di Angelantonio &, 2013. "The Age-Specific Quantitative Effects of Metabolic Risk Factors on Cardiovascular Diseases and Diabetes: A Pooled Analysis," PLOS ONE, Public Library of Science, vol. 8(7), pages 1-10, July.
    12. Sharon S Nakhimovsky & Andrea B Feigl & Carlos Avila & Gael O’Sullivan & Elizabeth Macgregor-Skinner & Mark Spranca, 2016. "Taxes on Sugar-Sweetened Beverages to Reduce Overweight and Obesity in Middle-Income Countries: A Systematic Review," PLOS ONE, Public Library of Science, vol. 11(9), pages 1-22, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Linh Luong & Linh Hoang Vu, 2020. "Impacts of Excise Taxation on Non-Alcoholic Beverage Consumption in Vietnam," Sustainability, MDPI, vol. 12(3), pages 1-13, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Joselin Segovia & Mercy Orellana & Juan Pablo Sarmiento & Darwin Carchi, 2020. "The effects of taxing sugar-sweetened beverages in Ecuador: An analysis across different income and consumption groups," PLOS ONE, Public Library of Science, vol. 15(10), pages 1-18, October.
    2. Andalón, Mabel & Gibson, John, 2018. "The ‘soda tax’ is unlikely to make Mexicans lighter or healthier: New evidence on biases in elasticities of demand for soda," MPRA Paper 86370, University Library of Munich, Germany.
    3. Mabel Andalon & John Gibson, 2017. "The 'Soda Tax' is Unlikely to Make Mexicans Lighter: New Evidence on Biases in Elasticities of Demand for Soda," Working Papers in Economics 17/07, University of Waikato.
    4. John Gibson & Alessandro Romeo, 2017. "Fiscal-Food Policies are Likely Misinformed by Biased Price Elasticities from Household Surveys: Evidence from Melanesia," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 4(3), pages 405-416, September.
    5. Guillermo Paraje, 2016. "The Effect of Price and Socio-Economic Level on the Consumption of Sugar-Sweetened Beverages (SSB): The Case of Ecuador," PLOS ONE, Public Library of Science, vol. 11(3), pages 1-13, March.
    6. Juan Carlos Caro & Shu Wen Ng & Ricardo Bonilla & Jorge Tovar & Barry M Popkin, 2017. "Sugary drinks taxation, projected consumption and fiscal revenues in Colombia: Evidence from a QUAIDS model," PLOS ONE, Public Library of Science, vol. 12(12), pages 1-16, December.
    7. John Gibson & Bonggeun Kim, 2017. "30 Years of Being Wrong: A Systematic Review and Critical Test of the Cox and Wohlgenant Approach to Quality-Adjusted Prices in Demand Analysis," Working Papers in Economics 17/16, University of Waikato.
    8. Gibson, John & Kim, Bonggeun, 2019. "Quality, quantity, and spatial variation of price: Back to the bog," Journal of Development Economics, Elsevier, vol. 137(C), pages 66-77.
    9. Crawford, Ian & Laisney, Francois & Preston, Ian, 2003. "Estimation of household demand systems with theoretically compatible Engel curves and unit value specifications," Journal of Econometrics, Elsevier, vol. 114(2), pages 221-241, June.
    10. Christophe Muller & Nouréini Sayouti, 2021. "How does information on minimum and maximum food prices affect measured monetary poverty? Evidence from Niger," AMSE Working Papers 2102, Aix-Marseille School of Economics, France, revised Oct 2021.
    11. Porto, Guido G., 2015. "Estimating household responses to trade reforms: Net consumers and net producers in rural Mexico," International Economics, Elsevier, vol. 144(C), pages 116-142.
    12. Daniel Lederman & Guido Porto, 2016. "The Price Is Not Always Right: On the Impacts of Commodity Prices on Households (and Countries)," The World Bank Research Observer, World Bank, vol. 31(1), pages 168-197.
    13. Tefera, Nigussie, 2012. "Welfare Impacts of Rising Food Prices in Rural Ethiopia: a Quadratic Almost Ideal Demand System Approach," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126698, International Association of Agricultural Economists.
    14. Lanie, Tomgouani, 2019. "Estimation des élasticités de demande des produits alimentaires au Togo," Économie rurale, French Society of Rural Economics (SFER Société Française d'Economie Rurale), vol. 369(July-Sept).
    15. Ralitza Dimova & Ira N. Gang & Monnet Gbakou & Daniel Hoffman, 2011. "Can economic crises be good for your diet?," Working Papers 299, Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies).
    16. Gibson, John & Rozelle, Scott, 2002. "Demand Systems With Unit Values: Comparisons With Elasticities from Market Prices," 2002 Conference (46th), February 13-15, 2002, Canberra, Australia 173980, Australian Agricultural and Resource Economics Society.
    17. Gracia, A. & Albisu, L. M., 1998. "The demand for meat and fish in Spain: Urban and rural areas," Agricultural Economics, Blackwell, vol. 19(3), pages 359-366, December.
    18. Salois, Matthew J. & Tiffin, J. Richard, 2010. "The Health Effects Of A Fiscal Food Policy," 115th Joint EAAE/AAEA Seminar, September 15-17, 2010, Freising-Weihenstephan, Germany 116394, European Association of Agricultural Economists.
    19. McCullough, Ellen & Zhen, Chen & Shin, Soye & Lu, Meichen & Arsenault, Joanne, 2022. "The role of food preferences in determining diet quality for Tanzanian consumers," Journal of Development Economics, Elsevier, vol. 155(C).
    20. Nicita, Alessandro, 2004. "Efficiency and equity of a marginal tax reform - income, quality, and price elasticities for Mexico," Policy Research Working Paper Series 3266, The World Bank.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:plo:pone00:0205931. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: plosone (email available below). General contact details of provider: https://journals.plos.org/plosone/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.