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Sugar Taxes and Changes in Total Calorie Consumption: A Simple Framework

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Abstract

This paper demonstrates the potential importance, when considering total calorie intake, of allowing for the substitution effects of imposing a selective tax on a commodity having a high sugar content, when non-taxed commodities exist and also have relatively high calorie content. A framework is presented which allows the elasticity of calorie consumption with respect to a price change to be derived. This brings out the role of relative budget shares, relative calorie content of goods and relative prices to be clearly seen, along with own- and cross-price elasticities. Their absolute values for each commodity group are not required. It is demonstrated that the focus of attention needs to be much wider than a simple concentration on the own-price elasticity of demand for the commodity group for which a sumptuary tax is envisaged.

Suggested Citation

  • John Creedy, 2016. "Sugar Taxes and Changes in Total Calorie Consumption: A Simple Framework," Treasury Working Paper Series 16/06, New Zealand Treasury.
    • Handle: RePEc:nzt:nztwps:16/06
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    File URL: https://treasury.govt.nz/sites/default/files/2016-12/twp16-06.pdf
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    References listed on IDEAS

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    1. Smith, Travis A. & Biing-Hwan, Lin & Lee, Jonq-Ying, 2010. "Taxing Caloric Sweetened Beverages: Potential Effects on Beverage Consumption, Calorie Intake, and Obesity," Economic Research Report 95465, United States Department of Agriculture, Economic Research Service.
    2. Schroeter, Christiane & Lusk, Jayson & Tyner, Wallace, 2008. "Determining the impact of food price and income changes on body weight," Journal of Health Economics, Elsevier, vol. 27(1), pages 45-68, January.
    3. Gibson, John & Kim, Bonggeun, 2013. "Quality, Quantity, and Nutritional Impacts of Rice Price Changes in Vietnam," World Development, Elsevier, vol. 43(C), pages 329-340.
    4. Anurag Sharma & Katharina Hauck & Bruce Hollingsworth & Luigi Siciliani, 2014. "The Effects Of Taxing Sugar‐Sweetened Beverages Across Different Income Groups," Health Economics, John Wiley & Sons, Ltd., vol. 23(9), pages 1159-1184, September.
    5. Lin, Biing-Hwan & Smith, Travis A. & Lee, Jonq-Ying, 2010. "The Effects of a Sugar-Sweetened Beverage Tax: Consumption, Calorie Intake, Obesity, and Tax Burden by Income," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61167, Agricultural and Applied Economics Association.
    6. 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.
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    More about this item

    Keywords

    Sugar-sweetened beverage; calorie intake; demand elasticity;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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