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Partial versus General Equilibrium Calorie and Revenue Effects of a Sugar-Sweetened Beverage Tax

Author

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  • Dharmasena, Senarath
  • Davis, George C.
  • Capps, Oral, Jr.

Abstract

The current obesity crisis in the United States is generating numerous alternative policy options for combating the problem. One alternative that has been widely proposed is an excise or sales tax on sugar-sweetened non-alcoholic beverages. This literature started out within a very simple partial equilibrium framework. Not considering the feedback effects (or general equilibrium effects) across interrelated market is a shortcoming of these partial equilibrium analyses. Our study is carried out to ascertain stochastic partial and general equilibrium calorie, body weight and revenue effects of a tax on sugar-sweetened beverages as well as incidence of such tax. We used Nielsen Homescan data on prices and quantities of selected non-alcoholic beverages purchased over the period January 1998 through December 2008. Probability density functions (pdfs) generated using simulations of calorie outcomes reveal that the calorie reduction due to tax on sugar-sweetened beverages is between 465 and 716 calories per person per month. However, consideration of both direct and indirect effects in generating the effect of the tax on sugar-sweetened beverages reveal reduction as low as 199 calories per person per month and as high as707 calories per person per month.

Suggested Citation

  • Dharmasena, Senarath & Davis, George C. & Capps, Oral, Jr., 2011. "Partial versus General Equilibrium Calorie and Revenue Effects of a Sugar-Sweetened Beverage Tax," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103509, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea11:103509
    DOI: 10.22004/ag.econ.103509
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    Cited by:

    1. 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.
    2. Lionel Cosnard, 2019. "Taxing Sugar and Sugary Products to Reduce Obesity: A CGE Assessment of Several Tax Policies," Post-Print hal-03148821, HAL.
    3. Cosnard, Lionel & Laborde, David, 2019. "Taxing Sugar and Sugary Products to Reduce Obesity: A CGE Assessment of Several Tax Policies," Conference papers 333067, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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