Accounting for Product Substitution in the Analysis of Food Taxes Targeting Obesity

We extend the existing literature on food taxes targeting obesity. First, we incorporate the implicit substitution between sugar and fat nutrients implied by a complete food demand system and by conditioning on how food taxes affect total calorie intake. Second, we propose a methodology that accounts for the ability of consumers to substitute leaner low-fat and low-sugar items for rich food items within the same food group. This substitution is integrated into a demand system in addition to substitution among food groups. Simulations of a tax on added sugars show that the impact of the tax on consumption patterns is understated and the effect on welfare loss overstated when abstracting from this substitution within food groups.


Issue Date:
2010-12
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/97927
Total Pages:
74
Series Statement:
CARD Working Paper
10-WP 518




 Record created 2017-04-01, last modified 2017-08-25

Fulltext:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)