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Accounting for Product Substitution in the Analysis of Food Taxes Targeting Obesity

Author

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  • Miao, Zhen
  • Beghin, John C.
  • Jensen, Helen H.

Abstract

We extend the existing literature on food taxes targeting obesity. We systematically incorporatethe implicit substitution between added sugars and solid fats into a comprehensive food demandsystem and evaluate the effect of taxes on sugars and fats. The approach conditions how foodand obesity taxes affect total calorie intake. The proposed methodology accounts for the abilityof consumers to substitute leaner low-fat and low-sugar items for rich food items within the samefood group. This substitution is integrated into a calibrated demand system in addition to thesubstitution among food groups, using recent food intake data and existing demand elasticities.Simulations of taxes on added sugars and solid fat show that their impact on consumptionpatterns is understated and the induced welfare loss is overstated when abstracting from thesubstitution possibilities within food groups.

Suggested Citation

  • Miao, Zhen & Beghin, John C. & Jensen, Helen H., 2012. "Accounting for Product Substitution in the Analysis of Food Taxes Targeting Obesity," Staff General Research Papers Archive 32211, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:32211
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Joan Gil & Guillem López Casasnovas & Toni Mora, 2013. "Taxation of unhealthy consumption of food and drinks: An updated literature review," Hacienda Pública Española, IEF, vol. 207(4), pages 119-140, December.
    2. Alberto Gago & Xavier Labandeira & Xiral López Otero, 2014. "A Panorama on Energy Taxes and Green Tax Reforms," Hacienda Pública Española, IEF, vol. 208(1), pages 145-190, March.
    3. Wilson, Norbert L. W. & Zheng, Yuqing & Burney, Shaheer & Kaiser, Harry M., 2016. "Do Grocery Food Sales Taxes Cause Food Insecurity?," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235324, Agricultural and Applied Economics Association.
    4. Alasdair Gardiner, 2016. "Implications of a Sugar Tax in New Zealand: Incidence and Effectiveness," Treasury Working Paper Series 16/09, New Zealand Treasury.
    5. Bíró, Anikó, 2015. "Did the junk food tax make the Hungarians eat healthier?," Food Policy, Elsevier, vol. 54(C), pages 107-115.
    6. Mora, Toni & Llargués, Esteve & Recasens, Assumpta, 2015. "Does health education affect BMI? Evidence from a school-based randomised-control trial," Economics & Human Biology, Elsevier, vol. 17(C), pages 190-201.
    7. Santeramo, Fabio Gaetano & Shabnam, Nadia, 2015. "The income-elasticity of calories, macro and micro nutrients: What is the literature telling us?," MPRA Paper 63754, University Library of Munich, Germany.

    More about this item

    Keywords

    sugar; obesity; fat; food demand; health policy nutrition; low-fat and low-sugar substitutes; sweeteners tax.;

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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