Taxing to Reduce Obesity

Type Working Paper
Title Taxing to Reduce Obesity
Author(s)
Publication (Day/Month/Year) 2016
URL http://www.enriqueseira.com/uploads/3/1/5/9/31599787/obesidad_02_junio.pdf
Abstract
We measure the effects of two federal taxes in Mexico aimed at reducing obesity by taxing sugary drinks (SDs) and high caloric density foods (HCFs). We use a weekly scanner panel dataset with more than 58,721 product barcodes and find more than full price pass-through for SDs and 66 percent pass-through for HCFs, which translated to 6 percent lower SD consumption but no decrease in HCFs. We find substantial substitution towards nontaxed goods and to smaller product presentations. Overall, sugar consumption decreased, fat increased, while calories and BMI remained unchanged. We estimate a demand model and simulate better revenue-equivalent taxes.

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