[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/112697.html
   My bibliography  Save this paper

Do Obese and Nonobese Consumers Respond Differently to Price Changes? Implications of Preference Heterogeneity for Using Food Taxes and Subsidies to Reduce Obesity

Author

Listed:
  • Zhen, Chen
  • Chen, Yu
  • Lin, Biing-Hwan
  • Karns, Shawn
  • Mancino, Lisa
  • Ver Ploeg, Michele
Abstract
Preference heterogeneity in food demand has important health and equity implications for targeted taxes and subsidies intended to enhance diet quality and reduce obesity. We study the role of obesity in the purchases of food at home and food away from home using data from the nationally representative National Household Food Acquisition and Purchase Survey. We develop a method for incorporating the complex survey design and retail scanner data into the estimation of a 21-good Exact Affine Stone Index demand system with endogenous prices and truncated purchases. We find significant preference heterogeneity associated with the obesity status of household members. Counterfactual simulations find that 1) a sweetened beverage tax is effective in increasing the healthfulness of grocery purchases by lower-income obese consumers; 2) the nutritional benefits of a fruit and vegetable subsidy are concentrated on nonobese consumers with little improvement in obese consumers’ Healthy Eating Index and an increase in their total calories purchased; and 3) a fiscally neutral healthy food subsidy fully funded by an unhealthy food tax benefits nonobese consumers both financially and nutritionally more than it does obese consumers. These findings show that lowering healthy food prices without raising the cost of unhealthy foods is unlikely to reduce obesity. Policymakers in favor of a systems approach of simultaneously taxing unhealthy foods and subsidizing healthy foods should be mindful of the distributional effects of this policy on obese consumers and the lower-income population.

Suggested Citation

  • Zhen, Chen & Chen, Yu & Lin, Biing-Hwan & Karns, Shawn & Mancino, Lisa & Ver Ploeg, Michele, 2021. "Do Obese and Nonobese Consumers Respond Differently to Price Changes? Implications of Preference Heterogeneity for Using Food Taxes and Subsidies to Reduce Obesity," MPRA Paper 112697, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:112697
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/112697/1/MPRA_paper_112697.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    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. Hunt Allcott & Benjamin B Lockwood & Dmitry Taubinsky, 2019. "Regressive Sin Taxes, with an Application to the Optimal Soda Tax," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(3), pages 1557-1626.
    3. James Nonnemaker & Eric Finkelstein & Mark Engelen & Thomas Hoerger & Matthew Farrelly, 2009. "Have Efforts To Reduce Smoking Really Contributed To The Obesity Epidemic?," Economic Inquiry, Western Economic Association International, vol. 47(2), pages 366-376, April.
    4. Rebecca L. C. Taylor & Scott Kaplan & Sofia B. Villas‐Boas & Kevin Jung, 2019. "Soda Wars: The Effect Of A Soda Tax Election On University Beverage Sales," Economic Inquiry, Western Economic Association International, vol. 57(3), pages 1480-1496, July.
    5. Terza, Joseph V. & Basu, Anirban & Rathouz, Paul J., 2008. "Two-stage residual inclusion estimation: Addressing endogeneity in health econometric modeling," Journal of Health Economics, Elsevier, vol. 27(3), pages 531-543, May.
    6. Harding, Matthew & Lovenheim, Michael, 2017. "The effect of prices on nutrition: Comparing the impact of product- and nutrient-specific taxes," Journal of Health Economics, Elsevier, vol. 53(C), pages 53-71.
    7. Clay, Marie & Ver Ploeg, Michele & Coleman-Jensen, Alisha & Elitzak, Howard & Gregory, Christian & Levin, David & Newman, Constance & Rabbitt, Mathew, 2016. "Comparing National Household Food Acquisition and Purchase Survey (FoodAPS) Data With Other National Food Surveys’ Data," Economic Information Bulletin 242451, United States Department of Agriculture, Economic Research Service.
    8. Pierre Dubois & Rachel Griffith & Aviv Nevo, 2014. "Do Prices and Attributes Explain International Differences in Food Purchases?," American Economic Review, American Economic Association, vol. 104(3), pages 832-867, March.
    9. West, Sarah E. & Williams, R.C.Roberton III, 2004. "Estimates from a consumer demand system: implications for the incidence of environmental taxes," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 535-558, May.
    10. 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.
    11. Diansheng Dong & Brian W. Gould & Harry M. Kaiser, 2004. "Food Demand in Mexico: An Application of the Amemiya-Tobin Approach to the Estimation of a Censored Food System," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 1094-1107.
    12. Yang Yu & Edward C. Jaenicke, 2020. "Estimating Food Waste as Household Production Inefficiency," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(2), pages 525-547, March.
    13. Robert Summers, 1973. "International Price Comparisons Based Upon Incomplete Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 19(1), pages 1-16, March.
    14. Chen Zhen & Ian F. Brissette & Ryan Richard Ruff, 2014. "By Ounce or by Calorie: The Differential Effects of Alternative Sugar-Sweetened Beverage Tax Strategies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(4), pages 1070-1083.
    15. Baum II, Charles L. & Ruhm, Christopher J., 2009. "Age, socioeconomic status and obesity growth," Journal of Health Economics, Elsevier, vol. 28(3), pages 635-648, May.
    16. Murphy, Kevin M & Topel, Robert H, 2002. "Estimation and Inference in Two-Step Econometric Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 88-97, January.
    17. Chen Zhen & Eric A. Finkelstein & James M. Nonnemaker & Shawn A. Karns & Jessica E. Todd, 2014. "Predicting the Effects of Sugar-Sweetened Beverage Taxes on Food and Beverage Demand in a Large Demand System," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(1), pages 1-25.
    18. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74(2), pages 132-132.
    19. 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.
    20. John Cawley & David Frisvold & David Jones & Chelsea Lensing, 2021. "The Pass‐Through of a Tax on Sugar‐Sweetened Beverages in Boulder, Colorado," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(3), pages 987-1005, May.
    21. Deaton, Angus, 1988. "Quality, Quantity, and Spatial Variation of Price," American Economic Review, American Economic Association, vol. 78(3), pages 418-430, June.
    22. Hunt Allcott & Benjamin B. Lockwood & Dmitry Taubinsky, 2019. "Should We Tax Sugar-Sweetened Beverages? An Overview of Theory and Evidence," Journal of Economic Perspectives, American Economic Association, vol. 33(3), pages 202-227, Summer.
    23. Amemiya, Takeshi, 1979. "The Estimation of a Simultaneous-Equation Tobit Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(1), pages 169-181, February.
    24. Senarath Dharmasena & Oral Capps, 2012. "Intended and unintended consequences of a proposed national tax on sugar‐sweetened beverages to combat the U.S. obesity problem," Health Economics, John Wiley & Sons, Ltd., vol. 21(6), pages 669-694, June.
    25. Silberberg, Eugene, 1985. "Nutrition and the Demand for Tastes," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 881-900, October.
    26. Gruber, Jonathan & Frakes, Michael, 2006. "Does falling smoking lead to rising obesity?," Journal of Health Economics, Elsevier, vol. 25(2), pages 183-197, March.
    27. Pierre Thomas Léger & Lisa M. Powell, 2021. "The impact of the Oakland SSB tax on prices and volume sold: A study of intended and unintended consequences," Health Economics, John Wiley & Sons, Ltd., vol. 30(8), pages 1745-1771, August.
    28. Falbe, J. & Thompson, H.R. & Becker, C.M. & Rojas, N. & McCulloch, C.E. & Madsen, K.A., 2016. "Impact of the Berkeley excise tax on sugar-sweetened beverage consumption," American Journal of Public Health, American Public Health Association, vol. 106(10), pages 1865-1871.
    29. Chen Zhen & Justin L. Taylor & Mary K. Muth & Ephraim Leibtag, 2009. "Understanding Differences in Self-Reported Expenditures between Household Scanner Data and Diary Survey Data: A Comparison of Homescan and Consumer Expenditure Survey," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 31(3), pages 470-492, September.
    30. Powell, Lisa M. & Leider, Julien, 2020. "The impact of Seattle’s Sweetened Beverage Tax on beverage prices and volume sold," Economics & Human Biology, Elsevier, vol. 37(C).
    31. Okrent, Abigail & Sweitzer, Megan, 2016. "Obesity as a Modifier of Price Sensitivity in the United States," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236251, Agricultural and Applied Economics Association.
    32. Goodarz Danaei & Eric L Ding & Dariush Mozaffarian & Ben Taylor & Jürgen Rehm & Christopher J L Murray & Majid Ezzati, 2009. "The Preventable Causes of Death in the United States: Comparative Risk Assessment of Dietary, Lifestyle, and Metabolic Risk Factors," PLOS Medicine, Public Library of Science, vol. 6(4), pages 1-23, April.
    33. Hunt Allcott & Rebecca Diamond & Jean-Pierre Dubé & Jessie Handbury & Ilya Rahkovsky & Molly Schnell, 2019. "Food Deserts and the Causes of Nutritional Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(4), pages 1793-1844.
    34. Courtemanche, Charles & Tchernis, Rusty & Ukert, Benjamin, 2018. "The effect of smoking on obesity: Evidence from a randomized trial," Journal of Health Economics, Elsevier, vol. 57(C), pages 31-44.
    35. Newey, Whitney K., 1987. "Efficient estimation of limited dependent variable models with endogenous explanatory variables," Journal of Econometrics, Elsevier, vol. 36(3), pages 231-250, November.
    36. Emily Wang & Christian Rojas & Francesca Colantuoni, 2017. "Heterogeneous Behavior, Obesity, and Storability in the Demand for Soft Drinks," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(1), pages 18-33.
    37. Okrent, Abigail M. & Alston, Julian M., 2012. "The Demand for Disaggregated Food-Away-from-Home and Food-at-Home Products in the United States," Economic Research Report 132469, United States Department of Agriculture, Economic Research Service.
    38. 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).
    39. Lin, Biing-Hwan & Smith, Travis A. & Lee, Jonq-Ying & Hall, Kevin D., 2011. "Measuring weight outcomes for obesity intervention strategies: The case of a sugar-sweetened beverage tax," Economics & Human Biology, Elsevier, vol. 9(4), pages 329-341.
    40. Arthur Lewbel & Krishna Pendakur, 2009. "Tricks with Hicks: The EASI Demand System," American Economic Review, American Economic Association, vol. 99(3), pages 827-863, June.
    41. Gandal Neil & Shabelansky Anastasia, 2010. "Obesity and Price Sensitivity at the Supermarket," Forum for Health Economics & Policy, De Gruyter, vol. 13(2), pages 1-19, July.
    42. Chen Zhen & Mary Muth & Abigail Okrent & Shawn Karns & Derick Brown & Peter Siegel, 2019. "Do differences in reported expenditures between household scanner data and expenditure surveys matter in health policy research?," Health Economics, John Wiley & Sons, Ltd., vol. 28(6), pages 782-800, June.
    43. Thomas L. Cox & Michael K. Wohlgenant, 1986. "Prices and Quality Effects in Cross-Sectional Demand Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(4), pages 908-919.
    44. Stefano DellaVigna & Matthew Gentzkow, 2019. "Uniform Pricing in U.S. Retail Chains," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(4), pages 2011-2084.
    45. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-890, July.
    46. Federico Perali & Jean-Paul Chavas, 2000. "Estimation of Censored Demand Equations from Large Cross-Section Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 1022-1037.
    47. David E. Sahn, 2005. "Consistent Estimation of Censored Demand Systems Using Panel Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(3), pages 660-672.
    48. Rick L. Williams, 2000. "A Note on Robust Variance Estimation for Cluster-Correlated Data," Biometrics, The International Biometric Society, vol. 56(2), pages 645-646, June.
    49. 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.
    50. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
    51. Kuo S. Huang, 1996. "Nutrient Elasticities in a Complete Food Demand System," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(1), pages 21-29.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chen Zhen & Yu Chen & Biing‐Hwan Lin & Shawn Karns & Lisa Mancino & Michele Ver Ploeg, 2024. "Do obese and nonobese consumers respond differently to price changes? Implications of preference heterogeneity for obesity‐oriented food taxes and subsidies," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(3), pages 1058-1088, May.
    2. Pourya Valizadeh & Shu Wen Ng, 2021. "Would A National Sugar‐Sweetened Beverage Tax in the United States Be Well Targeted?," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(3), pages 961-986, May.
    3. McCullough, Ellen & Zhen, Chen & Shin, Soye & Lu, Meichen & Arsenault, Joanne, 2022. "The role of food preferences in determining diet quality for Tanzanian consumers," Journal of Development Economics, Elsevier, vol. 155(C).
    4. Xiang, Di & Zhan, Lue & Bordignon, Massimo, 2020. "A reconsideration of the sugar sweetened beverage tax in a household production model," Food Policy, Elsevier, vol. 95(C).
    5. Alyssa J. Moran & Yuxuan Gu & Sasha Clynes & Attia Goheer & Christina A. Roberto & Anne Palmer, 2020. "Associations between Governmental Policies to Improve the Nutritional Quality of Supermarket Purchases and Individual, Retailer, and Community Health Outcomes: An Integrative Review," IJERPH, MDPI, vol. 17(20), pages 1-23, October.
    6. Leider, Julien & Powell, Lisa M., 2022. "Longer-term impacts of the Oakland, California, sugar-sweetened beverage tax on prices and volume sold at two-years post-tax," Social Science & Medicine, Elsevier, vol. 292(C).
    7. Di Cosmo, Valeria & Tiezzi, Silvia, 2023. "Let them Eat Cake? The Net Consumer Welfare Impact of Sin Taxes," MPRA Paper 116214, University Library of Munich, Germany.
    8. Chen Zhen & Mary Muth & Abigail Okrent & Shawn Karns & Derick Brown & Peter Siegel, 2019. "Do differences in reported expenditures between household scanner data and expenditure surveys matter in health policy research?," Health Economics, John Wiley & Sons, Ltd., vol. 28(6), pages 782-800, June.
    9. Ou Yang & Peter Sivey & Andrea M. de Silva & Anthony Scott, 2020. "Parents' Demand for Sugar Sweetened Beverages for Their Pre‐School Children: Evidence from a Stated‐Preference Experiment," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(2), pages 480-504, March.
    10. Wang, Shaonan & Zhen, Chen, 2022. "The Impact of the 2009 WIC Food Package Revision on Participants’ Food and Beverage Purchases," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322390, Agricultural and Applied Economics Association.
    11. Gonçalves, Judite & Pereira dos Santos, João, 2020. "Brown sugar, how come you taste so good? The impact of a soda tax on prices and consumption," Social Science & Medicine, Elsevier, vol. 264(C).
    12. Massimo Bordignon & Di Xiang & Lue Zhan, 2018. "Predicting the Effects of a Sugar Sweetened Beverage Tax in a Household Production Model," DISCE - Working Papers del Dipartimento di Economia e Finanza def075, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    13. John Cawley & David Frisvold & David Jones & Chelsea Lensing, 2021. "The Pass‐Through of a Tax on Sugar‐Sweetened Beverages in Boulder, Colorado," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(3), pages 987-1005, May.
    14. Felipe Lozano‐Rojas & Patrick Carlin, 2022. "The effect of soda taxes beyond beverages in Philadelphia," Health Economics, John Wiley & Sons, Ltd., vol. 31(11), pages 2381-2410, November.
    15. Aguilar, Arturo & Gutierrez, Emilio & Seira, Enrique, 2021. "The effectiveness of sin food taxes: Evidence from Mexico," Journal of Health Economics, Elsevier, vol. 77(C).
    16. Zhai, Tianchang & Li, Lei & Wang, Jingjing & Si, Wei, 2022. "Will the consumption tax on sugar-sweetened beverages help promote healthy beverage consumption? Evidence from urban China," China Economic Review, Elsevier, vol. 73(C).
    17. Pierre Dubois & Rachel Griffith & Martin O'Connell, 2020. "How Well Targeted Are Soda Taxes?," American Economic Review, American Economic Association, vol. 110(11), pages 3661-3704, November.
    18. Martin O'Connell & Pierre Dubois & Rachel Griffith, 2022. "The Use of Scanner Data for Economics Research," Annual Review of Economics, Annual Reviews, vol. 14(1), pages 723-745, August.
    19. John Cawley & David Frisvold & David Jones, 2020. "The impact of sugar‐sweetened beverage taxes on purchases: Evidence from four city‐level taxes in the United States," Health Economics, John Wiley & Sons, Ltd., vol. 29(10), pages 1289-1306, October.
    20. Gračner, Tadeja, 2021. "Bittersweet: How prices of sugar-rich foods contribute to the diet-related disease epidemic in Mexico," Journal of Health Economics, Elsevier, vol. 80(C).

    More about this item

    Keywords

    soda tax; fruit and vegetable subsidy; FoodAPS; EASI demand; preference heterogeneity; nutrition inequality;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:112697. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.