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Brown sugar, how come you taste so good? The impact of a soda tax on prices and consumption

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  • Gonçalves, Judite
  • Pereira dos Santos, João

Abstract

Increasing obesity-related problems and rising healthcare expenditures have led governments in developed countries to consider the introduction of soda taxes. We study a recent such tax, implemented in Portugal in February 2017 —one of the first soda taxes worldwide that increases with sugar content (0.08 euros per liter for drinks with less than 80 g of sugar per liter, and 0.16 euros per liter for drinks with 80 g or more sugar per liter, plus VAT). We use extremely detailed panel data from one of the two largest retailers in the country, covering the period between February 2015 and January 2018. We take advantage of the tax breakdown by sugar levels to examine how soda prices and quantities purchased reacted. For identification, we rely on difference-in-differences models with various vectors of fixed effects, comparing each group of products to water.

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  • Gonçalves, Judite & Pereira dos Santos, João, 2020. "Brown sugar, how come you taste so good? The impact of a soda tax on prices and consumption," Social Science & Medicine, Elsevier, vol. 264(C).
  • Handle: RePEc:eee:socmed:v:264:y:2020:i:c:s0277953620305517
    DOI: 10.1016/j.socscimed.2020.113332
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    Cited by:

    1. Pierre Dubois & Rachel Griffith & Martin O'Connell, 2020. "How Well Targeted Are Soda Taxes?," American Economic Review, American Economic Association, vol. 110(11), pages 3661-3704, November.

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    More about this item

    Keywords

    Soda tax; Sugar-sweetened beverages tax; Pass-through; Policy evaluation; Portugal;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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