title: The effect of prices on nutrition: Comparing the impact of product- and nutrient-specific taxes.
abstract: This paper provides an analysis of the role of prices in determining food purchases and nutrition using very detailed transaction-level observations for a large, nationally-representative sample of US consumers over the period 2002-2007. Using product-specific nutritional information, we develop a new method of partitioning the product space into relevant nutritional clusters that define a set of nutritionally-bundled goods, which parsimoniously characterize consumer choice sets. We then estimate a large utility-derived demand system over this joint product-nutrient space that allows us to calculate price and expenditure elasticities. Using our structural demand estimates, we simulate the role of product taxes on soda, sugar-sweetened beverages, packaged meals, and snacks, and nutrient taxes on fat, salt, and sugar. We find that a 20% nutrient tax has a significantly larger impact on nutrition than an equivalent product tax, due to the fact that these are broader-based taxes. However, the costs of these taxes in terms of consumer utility are only about 70 cents per household per day. A sugar tax in particular is a powerful tool to induce healthier nutritive bundles among consumers.
authors.affiliation: Department of Economics, University of California - Irvine, 3207 Social Science Plaza B, Irvine, CA 92697, United States; Department of Statistics, University of California - Irvine, 3207 Social Science Plaza B, Irvine, CA 92697, United States. Electronic address: harding1@uci.edu.
authors.forename: Matthew
authors.initials: M
authors.lastname: Harding
authors.affiliation: Department of Policy Analysis and Management, College of Human Ecology, Cornell University, 102 Martha Van Rensselaer Hall, Ithaca, NY 14853, United States; NBER, United States. Electronic address: mfl55@cornell.edu.
authors.forename: Michael
authors.initials: M
authors.lastname: Lovenheim
mesh_terms: D002253:Carbonated Beverages / Q000145:classification / Q000191:economics* / Q000706:statistics & numerical data; D002755:Choice Behavior; D003132:Commerce / Q000191:economics*; D003258:Consumer Behavior / Q000191:economics* / Q000706:statistics & numerical data; D004034:Diet Surveys; D000072001:Diet, Healthy / Q000191:economics* / Q000706:statistics & numerical data; D004041:Dietary Fats / Q000191:economics; D019422:Dietary Sucrose / Q000191:economics; D057140:Fast Foods / Q000191:economics* / Q000706:statistics & numerical data; D006801:Humans; D018673:Nutrition Policy / Q000191:economics*; D062410:Snacks; D012982:Sodium, Dietary / Q000191:economics; D013660:Taxes / Q000191:economics*; D014481:United States
chemical_list: D004041:Dietary Fats; D019422:Dietary Sucrose; D012982:Sodium, Dietary
keywords: Food and nutrient demand; Food taxes; Purchasing environments; QUAIDS; SSBs