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Heterogeneous behavior, obesity and storability in soft drink consumption: A dynamic demand model

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  • Colantuoni, Francesca
  • Rojas, Christian

Abstract

In this paper we applied a dynamic estimation procedure to inves-tigate the role of obesity on the demand for soda. The dynamic model accounts for storing behaviors, and allowed us to study price sensitiv-ity as well as sale sensitivity of soda consumers. By matching store level data to obesity data, we considered the effect of obesity rates on soda demand. We found that higher obesity rates were associated with a higher attitude to anticipate future needs and respond to sale prices. Conversely, according to our results, a higher rate of obesity was also associated to lower price sensitivity. We also considered how some obesity predictors affected the demand for soda. Our results contribute to the existing literature by raising important elements to help establish correct policies to fight obesity. For instance, our re-search suggests that a policy intervention restricting the magnitude of sales would be more successful than a tax increase in modifying the behavior of obese consumers.

Suggested Citation

  • Colantuoni, Francesca & Rojas, Christian, 2013. "Heterogeneous behavior, obesity and storability in soft drink consumption: A dynamic demand model," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 257244, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea13:257244
    DOI: 10.22004/ag.econ.257244
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    References listed on IDEAS

    as
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    10. Igal Hendel & Aviv Nevo, 2006. "Sales and Consumer Inventory," RAND Journal of Economics, The RAND Corporation, vol. 37(3), pages 543-561, Autumn.
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