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Measuring Consumer Responses to a Bottled Water Tax Policy

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  • Peter Berck
  • Jacob Moe-Lange
  • Andrew Stevens
  • Sofia Villas-Boas

Abstract

Using panel data of retail purchases, we measure the effects of the introduction, and later removal, of a bottled-water tax in the state of Washington. We use a difference-in-differences approach to measure effects of the tax against untreated stores (in comparable control states) and untreated weeks (the pre-period). We further estimate triple-difference specifications comparing bottled water to juice and milk substitute products. Our results show that, when imposed, the tax causes bottled water sales to drop by nearly 6% in our preferred specification. Sales never fully recover, even after the tax removal. In terms of the heterogeneity of this effect, we find larger quantity drops in high tax rate areas and in the lowest and highest quintile income areas.

Suggested Citation

  • Peter Berck & Jacob Moe-Lange & Andrew Stevens & Sofia Villas-Boas, 2016. "Measuring Consumer Responses to a Bottled Water Tax Policy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(4), pages 981-996.
    • Handle: RePEc:oup:ajagec:v:98:y:2016:i:4:p:981-996.
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    File URL: http://hdl.handle.net/10.1093/ajae/aaw037
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    References listed on IDEAS

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    1. Alfonso Flores-Lagunes & Troy Timko, 2015. "Does Participation in 4-H Improve Schooling Outcomes? Evidence from Florida," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(2), pages 414-434.
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    Cited by:

    1. Diansheng Dong & Yuqing Zheng & Hayden Stewart, 2020. "The effects of food sales taxes on household food spending: An application of a censored cluster model," Agricultural Economics, International Association of Agricultural Economists, vol. 51(5), pages 669-684, September.
    2. Fan, Linlin & Stevens, Andrew W. & Thomas, Betty, 2022. "Consumer purchasing response to mandatory genetically engineered labeling," Food Policy, Elsevier, vol. 110(C).
    3. Daniel Leppert, 2023. "“No fences make bad neighbors” but markets make better ones: cap-and-trade reduces cross-border SO2 in a natural experiment," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 25(3), pages 407-433, July.
    4. Kristin Kiesel & Mengxin Ji, 2021. "Did state‐mandated restrictions on sugar‐sweetened drinks in California high schools increase soda purchases in school neighborhoods?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(4), pages 1443-1475, December.
    5. Hoy, Kyle A. & Wrenn, Douglas H., 2020. "The effectiveness of taxes in decreasing candy purchases," Food Policy, Elsevier, vol. 97(C).

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