“The effects of taxation on the individual consumption of sugar‐sweetened beverages”

To assess the impact of taxation on the consumption of sugar-sweetened beverages (SSB), most studies consider the average consumer. Individual consumption is, however, very heterogeneous. In this paper, we propose a three-step methodology to assess the impact of SSB taxation on individual consumption. First, we use a disaggregation method to recover individual consumption from observed household consumption. Second, we estimate a matrix of price elasticities of demand. Third, we simulate the impact on individual consumption of a tax policy. We find that adults, both men and women, consume a larger quantity of regular soft drinks than children. We find large heterogeneity in consumption. Moreover, the average consumption of a beverage, at a given age category, increases with body mass index. We find price elasticities of demand in the range of -1.1 to -3.5 depending on the beverages. Finally, we show that a 0.07 e tax on SSB might decrease the consumption of 5% of the adult population by more than 1.3 kg; the decrease being larger for an obese adult than a normal weight adult. For children, the decrease in sugar consumption is larger than 1 kg per year for about 5% of children. JEL codes: D12, H31, Q18, I18