Carbonated Soft Drink Choices and Obesity

Although obesity is already the leading public health crisis in the U.S., with an estimated social cost of approximately $120 billion a year and growing (Rowley, 2004), obesity incidence continues to increase at an alarming rate (Kuhn, 2002). The main culprits are the increase in the consumption of high-calorie foods and beverages and a decrease in exercise (Kuhn, 2002; Allhouse, Frazao, and Tupening, 2002). Paralleling the increase in obesity is the increase in consumption of carbonated soft drinks (Center for Science in the Public Interest, 2005; DiMeglio and Mattes, 2000). Carbonated soft drinks (CSDs) are a very large part of the American diet. These wellliked drinks account for approximately 30% of all beverages (alcoholic and non-alcoholic) consumed in the U.S. (U.S. Department of Agriculture, 2008). In 2000, Americans spent $61 billion on CSDs (National Soft Drink Association, 2003) and CSDs are among the best-selling products in American grocery stores (Center for Science in the Public Interest, 2005). Also in 2000, more than 15 billion gallons were sold in the United States, which equals every American consuming at least one 12-ounce can per day or an average of 53 gallons per year (Squires, 2001). This article examines consumer CSD choices and their implications for obesity policy. Specifically, it assesses the importance of product and consumer heterogeneity on consumer choices using a random coefficients logit model (Berry, Levinsohn, and Pakes, 1995; hereafter BLP) and a national dataset that includes product and consumer characteristics. The estimated choice parameters are then linked to consumer body mass indexes (BMI) using a second-stage regression, and the effectiveness of tax policies assessed through counterfactual experiments.