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The Impact of Beverage Taxes on Quantity and Quality of Consumption in France

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  • Silva, Andres
  • Etilé, Fabrice
  • Boizot-Szantai, Christine
  • Dharmasena, Senarath

Abstract

Many countries around the World have applied, or are studying to apply, sugar-sweetened beverage taxes as a way to mitigate increasing obesity. The objective of our study is to illustrate about the relevance of controlling for quality choices within product categories when analyzing the impact of a sugar-sweetened beverage tax. We calculate own-price quantity and quality elasticities using the methodology developed by Deaton (1988). For comparison purposes, we also calculate own price elasticities with a standard unit price methodology, which means using unit values as a proxy for prices. With both set of elasticities, we simulate a scenario of 20% tax. Using Deaton’s methodology, we find a decrease in quantity (-12.4%) and quality demanded (-0.3%). Using unit values methodology, we find a larger expected decrease in quantity demanded (-22.9%). Therefore, we show empirical evidence that both quantity and quality need to be taken into account to understand the implications of a sugar-sweetened beverage tax.

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Bibliographic Info

Paper provided by Agricultural and Applied Economics Association in its series 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. with number 150428.

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Date of creation: 2013
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Handle: RePEc:ags:aaea13:150428

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Keywords: beverage tax; unit value bias; quality; Consumer/Household Economics; Food Consumption/Nutrition/Food Safety; International Relations/Trade; D10; D12; Q18;

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  1. Smith, Travis A. & Biing-Hwan, Lin & Lee, Jonq-Ying, 2010. "Taxing Caloric Sweetened Beverages: Potential Effects on Beverage Consumption, Calorie Intake, and Obesity," Economic Research Report 95465, United States Department of Agriculture, Economic Research Service.
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  5. Deaton, A., 1988. "Price Elasticities From Survey Data: Extensions And Indonesian Results," Papers 138, Princeton, Woodrow Wilson School - Development Studies.
  6. Amita Majumder & Ranjan Ray & Kompal Sinha, 2012. "Calculating Rural-Urban Food Price Differentials from Unit Values in Household Expenditure Surveys: A Comparison with Existing Methods and A New Procedure," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(5), pages 1218-1235.
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  8. Berardi, N. & Sevestre, P. & Tepaut, M. & Vigneron, A., 2012. "The impact of a `soda tax' on prices. Evidence from French micro data," Working papers 415, Banque de France.
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  10. Finkelstein, Eric A. & Zhen, Chen & Bilger, Marcel & Nonnemaker, James & Farooqui, Assad M. & Todd, Jessica E., 2013. "Implications of a sugar-sweetened beverage (SSB) tax when substitutions to non-beverage items are considered," Journal of Health Economics, Elsevier, vol. 32(1), pages 219-239.
  11. Preston, Ian & Laisney, François & Crawford, Ian A., 2002. "Estimation of Household Demand Systems with Theoretically Compatible Engel Curves and Unit Value Specifications," ZEW Discussion Papers 97-06 [rev.], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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  13. Bonnet, Céline & Réquillart, Vincent, 2010. "Does the EU Sugar Policy Reform Increase Added Sugar Consumption? An Empirical Evidence on the Soft Drink Market," TSE Working Papers 10-197, Toulouse School of Economics (TSE).
  14. Chouinard Hayley H & Davis David E & LaFrance Jeffrey T & Perloff Jeffrey M, 2007. "Fat Taxes: Big Money for Small Change," Forum for Health Economics & Policy, De Gruyter, vol. 10(2), pages 1-30, June.
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  16. Olivier Allais & Patrice Bertail & Véronique Nichèle, 2010. "The Effects of a Fat Tax on French Households' Purchases: A Nutritional Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(1), pages 228-245.
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