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The effect of prices on nutrition: Comparing the impact of product- and nutrient-specific taxes

Listed author(s):
  • Harding, Matthew
  • Lovenheim, Michael

This paper provides an analysis of the role of prices in determining food purchases and nutrition using very detailed transaction-level observations for a large, nationally-representative sample of US consumers over the period 2002–2007. Using product-specific nutritional information, we develop a new method of partitioning the product space into relevant nutritional clusters that define a set of nutritionally-bundled goods, which parsimoniously characterize consumer choice sets. We then estimate a large utility-derived demand system over this joint product-nutrient space that allows us to calculate price and expenditure elasticities. Using our structural demand estimates, we simulate the role of product taxes on soda, sugar-sweetened beverages, packaged meals, and snacks, and nutrient taxes on fat, salt, and sugar. We find that a 20% nutrient tax has a significantly larger impact on nutrition than an equivalent product tax, due to the fact that these are broader-based taxes. However, the costs of these taxes in terms of consumer utility are only about 70 cents per household per day. A sugar tax in particular is a powerful tool to induce healthier nutritive bundles among consumers.

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File URL: http://www.sciencedirect.com/science/article/pii/S0167629617301522
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Article provided by Elsevier in its journal Journal of Health Economics.

Volume (Year): 53 (2017)
Issue (Month): C ()
Pages: 53-71

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Handle: RePEc:eee:jhecon:v:53:y:2017:i:c:p:53-71
DOI: 10.1016/j.jhealeco.2017.02.003
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505560

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