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The effectiveness of taxes in decreasing candy purchases

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  • Hoy, Kyle A.
  • Wrenn, Douglas H.

Abstract

We use candy purchase data at the household level to analyze changes in candy purchases due to Colorado’s candy tax. Colorado is one of the many states that exempts candy containing flour from their candy tax. To do this, we construct a dataset of monthly household taxed and tax-exempt candy purchases for the years 2009 and 2010 for the Denver, CO and Omaha, NE metros. Difference-in-differences estimates imply that Colorado’s candy tax led to a decrease in taxed candy purchases of at least 11.2%, which would translate into a reduction of household body weight of at least one pound during the first year the tax is in effect. Conversely, we find no effect on the purchase of tax-exempt candy.

Suggested Citation

  • Hoy, Kyle A. & Wrenn, Douglas H., 2020. "The effectiveness of taxes in decreasing candy purchases," Food Policy, Elsevier, vol. 97(C).
    • Handle: RePEc:eee:jfpoli:v:97:y:2020:i:c:s0306919220301639
    DOI: 10.1016/j.foodpol.2020.101959
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    More about this item

    Keywords

    Candy; Taxes; Sin tax; Difference-in-differences;
    All these keywords.

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • I1 - Health, Education, and Welfare - - Health

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