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The Effect of Price and Socio-Economic Level on the Consumption of Sugar-Sweetened Beverages (SSB): The Case of Ecuador

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  • Guillermo Paraje

Abstract

The objective of this article is to estimate the own-price, cross-price and income elasticities of demand for SSB in Ecuador, as an indispensable step for predicting a reduction in the consumption of said beverages caused by the potential implementation of taxes in Ecuador. In addition, the own-price, cross-price and income elasticities of sugar-free substitutes like mineral water and diet soft drinks and juices are also estimated. The data from the 2011–2012 ENIGHUR, which contains detailed information on household consumption and socioeconomic variables, was used. The estimates are done using Deaton’s Almost Ideal Demand System (AIDS) which accounts for differences in the quality of goods purchased. This demand system is estimated for different socio-economic groups, according to total household expenditure. The results reveal own-price elasticities for SSB between –1.17 and –1.33 depending on the socio-economic group, in line with the existing evidence for developed countries. Own-price elasticity for non-SSB is between -1 and -1.24. Income elasticities reveal that both SSB and non-SSB are normal goods with elasticities decreasing for higher socio-economic groups. These results show that the consumption of SSB is sensitive to price changes, meaning that the implementation of taxes on said beverages could be effective in reducing their consumption. The fact that non-SSB are also sensitive to price changes would indicate that subsidies could be implemented for the production of some of them.

Suggested Citation

  • Guillermo Paraje, 2016. "The Effect of Price and Socio-Economic Level on the Consumption of Sugar-Sweetened Beverages (SSB): The Case of Ecuador," PLOS ONE, Public Library of Science, vol. 11(3), pages 1-13, March.
  • Handle: RePEc:plo:pone00:0152260
    DOI: 10.1371/journal.pone.0152260
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    References listed on IDEAS

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    Cited by:

    1. Catherine Haeck & Nicholas Lawson & Krystel Poirier, 2022. "Estimating consumer preferences for different beverages using the BLP approach," Working Papers 22-01, Research Group on Human Capital, University of Quebec in Montreal's School of Management.
    2. Violeta Chacon & Guillermo Paraje & Joaquin Barnoya & Frank J Chaloupka, 2018. "Own-price, cross-price, and expenditure elasticities on sugar-sweetened beverages in Guatemala," PLOS ONE, Public Library of Science, vol. 13(10), pages 1-12, October.
    3. Haeck, Catherine & Lawson, Nicholas & Poirier, Krystel, 2022. "Estimating consumer preferences for different beverages using the BLP approach," Economics & Human Biology, Elsevier, vol. 46(C).
    4. Mahmoud ABDEL HAMID SALEH & Abdullah Mohammed ALHIDARI & Abdulrahman AL-MANSOUR & AbdulElah AL-KHUDHAIR, 2018. "Health Awareness and Price Sensitivity as Predictors of Consumer’s Purchase Attitude towards Soft Drinks," Expert Journal of Marketing, Sprint Investify, vol. 6(1), pages 22-32.
    5. Luis A Sandoval & Carlos E Carpio & Marcos Sanchez-Plata, 2019. "The effect of ‘Traffic-Light’ nutritional labelling in carbonated soft drink purchases in Ecuador," PLOS ONE, Public Library of Science, vol. 14(10), pages 1-18, October.
    6. Juan Carlos Caro & Shu Wen Ng & Ricardo Bonilla & Jorge Tovar & Barry M Popkin, 2017. "Sugary drinks taxation, projected consumption and fiscal revenues in Colombia: Evidence from a QUAIDS model," PLOS ONE, Public Library of Science, vol. 12(12), pages 1-16, December.
    7. Sharon S Nakhimovsky & Andrea B Feigl & Carlos Avila & Gael O’Sullivan & Elizabeth Macgregor-Skinner & Mark Spranca, 2016. "Taxes on Sugar-Sweetened Beverages to Reduce Overweight and Obesity in Middle-Income Countries: A Systematic Review," PLOS ONE, Public Library of Science, vol. 11(9), pages 1-22, September.
    8. Caro, Juan Carlos & Ng, Shu Wen & Taillie, Lindsey Smith & Popkin, Barry M., 2017. "Designing a tax to discourage unhealthy food and beverage purchases: The case of Chile," Food Policy, Elsevier, vol. 71(C), pages 86-100.
    9. Joselin Segovia & Mercy Orellana & Juan Pablo Sarmiento & Darwin Carchi, 2020. "The effects of taxing sugar-sweetened beverages in Ecuador: An analysis across different income and consumption groups," PLOS ONE, Public Library of Science, vol. 15(10), pages 1-18, October.
    10. Linh Luong & Linh Hoang Vu, 2020. "Impacts of Excise Taxation on Non-Alcoholic Beverage Consumption in Vietnam," Sustainability, MDPI, vol. 12(3), pages 1-13, February.

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