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The Impact of Sugar-Sweetened Beverage Taxes on Purchases: Evidence from Four City-Level Taxes in the U.S

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  • John Cawley
  • David Frisvold
  • David Jones

Abstract

Since 2017, many U.S. cities have implemented taxes on sugar-sweetened beverages (SSBs) to decrease consumption of sugary beverages and raise revenue. In this paper, we analyze household receipt data to examine the impact of SSB taxes on households’ purchases of taxed and untaxed beverages in the four largest U.S. cities with such taxes: Philadelphia, Pennsylvania; San Francisco, California; Seattle, Washington; and Oakland, California. We estimate the impact of these taxes by comparing changes in monthly household purchases in the treatment cities to changes in one of two comparison groups: 1) areas adjacent to the treatment cities; or 2) a matched set of households nationally. We find that an increase in the beverage tax rate of 1 cent per ounce decreases household purchases of taxed beverages by 53.0 ounces per month or 12.2 percent. This impact is small in magnitude and consistent with a reduction in individual consumption of 5 calories per day per household member and eventual reduction in weight of 0.5 pounds. When we examine results separately by city, we find that the decline was concentrated in Philadelphia, where the tax decreased purchases by 27.7 percent. We do not find impacts of the taxes in the other three cities combined.

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  • John Cawley & David Frisvold & David Jones, 2019. "The Impact of Sugar-Sweetened Beverage Taxes on Purchases: Evidence from Four City-Level Taxes in the U.S," NBER Working Papers 26393, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:26393
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    References listed on IDEAS

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    1. John Cawley & David Frisvold & Anna Hill & David Jones, 2020. "The Impact of the Philadelphia Beverage Tax on Prices and Product Availability," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 39(3), pages 605-628, June.
    2. Stephen G. Donald & Kevin Lang, 2007. "Inference with Difference-in-Differences and Other Panel Data," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 221-233, May.
    3. Fletcher, Jason M. & Frisvold, David E. & Tefft, Nathan, 2010. "The effects of soft drink taxes on child and adolescent consumption and weight outcomes," Journal of Public Economics, Elsevier, vol. 94(11-12), pages 967-974, December.
    4. David Roodman & James G. MacKinnon & Morten Ørregaard Nielsen & Matthew D. Webb, 2019. "Fast and wild: Bootstrap inference in Stata using boottest," Stata Journal, StataCorp LP, vol. 19(1), pages 4-60, March.
    5. A. Colin Cameron & Douglas L. Miller, 2015. "A Practitioner’s Guide to Cluster-Robust Inference," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 317-372.
    6. Falbe, J. & Rojas, N. & Grummon, A.H. & Madsen, K.A., 2015. "Higher retail prices of sugar-sweetened beverages 3 months after implementation of an excise tax in Berkeley, California," American Journal of Public Health, American Public Health Association, vol. 105(11), pages 2194-2201.
    7. Jason M. Fletcher & David E. Frisvold & Nathan Tefft, 2015. "Non‐Linear Effects of Soda Taxes on Consumption and Weight Outcomes," Health Economics, John Wiley & Sons, Ltd., vol. 24(5), pages 566-582, May.
    8. Cawley, John & Frisvold, David & Hill, Anna & Jones, David, 2019. "The impact of the Philadelphia beverage tax on purchases and consumption by adults and children," Journal of Health Economics, Elsevier, vol. 67(C).
    9. Jason M. Fletcher & David Frisvold & Nathan Tefft, 2010. "Can Soft Drink Taxes Reduce Population Weight?," Contemporary Economic Policy, Western Economic Association International, vol. 28(1), pages 23-35, January.
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    Cited by:

    1. Christian Rojas & Emily Wang, 2021. "Do Taxes On Soda And Sugary Drinks Work? Scanner Data Evidence From Berkeley And Washington State," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 95-118, January.
    2. Rosella Levaggi & Carmen Marchiori & Paolo M. Panteghini, 2022. "Lifestyle taxes in the presence of profit shifting," Journal of Economics, Springer, vol. 137(1), pages 81-96, September.
    3. Cengiz, Ezgi & Cengiz, Doruk, 2020. "The Impacts of Soda Taxes in U.S. Localities," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304351, Agricultural and Applied Economics Association.
    4. John Cawley & David Frisvold & David Jones, "undated". "Multi-City Study Shows Beverage Taxes Raise Prices, Reduce and Shift Purchases," Mathematica Policy Research Reports d6ef552ad2454dd2956864c26, Mathematica Policy Research.
    5. Michael D. Thomas & Nathan A. Miller, 2021. "Experimental Public Policy, Discovery, and Behavioral Taxation," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 36(Winter 20), pages 1-20.
    6. Brandon J. Restrepo & Jonathan H. Cantor, 2020. "The effects of soda taxes on adolescent sugar intake and blood sugar," Health Economics, John Wiley & Sons, Ltd., vol. 29(11), pages 1422-1434, November.
    7. Tobias König & Renke Schmacker, 2022. "Preferences for Sin Taxes," CESifo Working Paper Series 10046, CESifo.

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    More about this item

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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