Revisiting Sugar Taxes and Sugary Drink Consumption: Evidence from the Random-Coefficient Demand Model

Yinjunjie Zhang, Marco A. Palma*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

4 Citations (Scopus)

Abstract

Berkeley's sugar tax policy is currently under intense scrutiny and debate, while similar tax policies are rapidly expanding to other U.S. states. Contrary to theoretical predictions and policy expectations, previous literature documents short-term evidence of increased consumption of sugary drinks in response to a sugar tax policy. We investigate the underlying mechanism behind this behavioral anomaly using the Berry, Levinsohn, and Pakes (BLP) random coefficient (RC) logit demand model in characteristic space.We find that the consumption increase is mainly driven by a change in the average valuation of the sugar content going from negative to positive following enactment of the sugar tax policy.

Original languageEnglish
Pages (from-to)37-55
Number of pages19
JournalJournal of Agricultural and Resource Economics
Volume46
Issue number1
DOIs
Publication statusPublished - Jan 2021

Fingerprint

Dive into the research topics of 'Revisiting Sugar Taxes and Sugary Drink Consumption: Evidence from the Random-Coefficient Demand Model'. Together they form a unique fingerprint.

Cite this