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The Danish tax on saturated fat – Short run effects on consumption, substitution patterns and consumer prices of fats

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  • Jensen, Jørgen Dejgård
  • Smed, Sinne

Abstract

Denmark introduced a tax on saturated fat in food products with effect from October 2011. The objective of this paper is to make an effect assessment of this tax for some of the product categories most significantly affected by the new tax, namely fats such as butter, butter-blends, margarine and oils. This assessment is done by conducting an econometric analysis on weekly food purchase data from a large household panel dataset (GfK Panel Services Denmark), spanning the period from January 2008 until July 2012.The econometric analysis suggest that the introduction of the tax on saturated fat in food products has had some effects on the market for the considered products, in that the level of consumption of fats dropped by 10–15%. Furthermore, the analysis points at shifts in demand from high price supermarkets towards low-price discount stores – at least for some types of oils and fats, a shift that seems to have been utilised by discount chains to raise the prices of butter and margarine by more than the pure tax increase. Due to the relatively short data period with the tax being active, interpretation of these findings from a long-run perspective should be done with considerable care. It is thus recommended to repeat – and broaden – the analysis at a later stage, when data are available for a longer period after the introduction of the fat tax.

Suggested Citation

  • Jensen, Jørgen Dejgård & Smed, Sinne, 2013. "The Danish tax on saturated fat – Short run effects on consumption, substitution patterns and consumer prices of fats," Food Policy, Elsevier, vol. 42(C), pages 18-31.
  • Handle: RePEc:eee:jfpoli:v:42:y:2013:i:c:p:18-31
    DOI: 10.1016/j.foodpol.2013.06.004
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. repec:eee:jfpoli:v:79:y:2018:i:c:p:235-246 is not listed on IDEAS
    3. repec:eee:hepoli:v:121:y:2017:i:8:p:887-894 is not listed on IDEAS
    4. Inge van den Bijgaart, 2018. "Too Slow a Change? Deep Habits, Consumption Shifts and Transitory Tax Policy," CESifo Working Paper Series 6958, CESifo Group Munich.
    5. Joan Gil & Guillem López Casasnovas & Toni Mora, 2013. "Taxation of unhealthy consumption of food and drinks: An updated literature review," Hacienda Pública Española, IEF, vol. 207(4), pages 119-140, December.
    6. Bíró, Anikó, 2015. "Did the junk food tax make the Hungarians eat healthier?," Food Policy, Elsevier, vol. 54(C), pages 107-115.
    7. Alberto Gago & Xavier Labandeira & Xiral López Otero, 2014. "A Panorama on Energy Taxes and Green Tax Reforms," Hacienda Pública Española, IEF, vol. 208(1), pages 145-190, March.
    8. Annamaria Menichini & Giovanni Immordino & Maria Grazia Romano, 2016. "Taxing and Regulating Vices," CSEF Working Papers 434, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    9. Irz, Xavier & Mazzocchi, Mario & Réquillart, Vincent & Soler, Louis-Georges, 2015. "Research in Food Economics: past trends and new challenges," Revue d'Etudes en Agriculture et Environnement, Editions NecPlus, vol. 96(01), pages 187-237, March.
    10. Dogbe, W. & Gil, J.M., 2018. "Effects of a modified Danish fat tax on food consumption and nutrients intake in Spain," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277237, International Association of Agricultural Economists.
    11. Alok Bhargava, 2015. "Diet Quality, Child Health, and Food Policies in Developing Countries," World Bank Research Observer, World Bank Group, vol. 30(2), pages 247-276.
    12. Cordts, Anette & Nitzko, Sina & Spiller, Achim, 2014. "Consumer Response to Negative Information on Meat Consumption in Germany," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 17(A), pages 1-24, March.
    13. Réquillart, Vincent & Soler, Louis-Georges & Zang, Yu, 2016. "Quality standards versus nutritional taxes: Health and welfare impacts with strategic firms," Journal of Health Economics, Elsevier, vol. 50(C), pages 268-285.
    14. Apostolidis, Chrysostomos & McLeay, Fraser, 2016. "Should we stop meating like this? Reducing meat consumption through substitution," Food Policy, Elsevier, vol. 65(C), pages 74-89.
    15. Chen, Xiu & Kaiser, Harry M. & Rickard, Bradley J., 2015. "The impacts of inclusive and exclusive taxes on healthy eating: An experimental study," Food Policy, Elsevier, vol. 56(C), pages 13-24.
    16. Romana Khan & Kanishka Misra & Vishal Singh, 2016. "Will a Fat Tax Work?," Marketing Science, INFORMS, vol. 35(1), pages 10-26, January.

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