The Impact of Beverage Taxes on Quantity and Quality of Consumption in France
Many countries around the World have applied, or are studying to apply, sugar-sweetened beverage taxes as a way to mitigate increasing obesity. The objective of our study is to illustrate about the relevance of controlling for quality choices within product categories when analyzing the impact of a sugar-sweetened beverage tax. We calculate own-price quantity and quality elasticities using the methodology developed by Deaton (1988). For comparison purposes, we also calculate own price elasticities with a standard unit price methodology, which means using unit values as a proxy for prices. With both set of elasticities, we simulate a scenario of 20% tax. Using Deaton’s methodology, we find a decrease in quantity (-12.4%) and quality demanded (-0.3%). Using unit values methodology, we find a larger expected decrease in quantity demanded (-22.9%). Therefore, we show empirical evidence that both quantity and quality need to be taken into account to understand the implications of a sugar-sweetened beverage tax.
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