Taxing sugary beverages not a clear cut strategy to reduce obesity

Posted by AFN Staff Writers on 23rd September 2013

Applying a tax to sugary beverages may help reduce calories from those beverages, but the health benefits may be partially offset as consumers substitute the drinks with other ‘unhealthy’ foods, according to a joint study by researchers at RTI International, Duke University and the US Department of Agriculture.

The study, published online in July 2013 in the American Journal of Agricultural Economics, found that a half-cent per ounce increase in sugar-sweetened beverage prices, which adds up to about ten cents on a typical 20-ounce bottle of soft drink, could reduce the total calories from the 23 foods and beverages examined under the study.

However, the researchers found the reduction in sugary beverages due to a “soda tax” would likely lead consumers to substitute for those beverage calories by increasing their calorie, salt and fat intake from untaxed foods and beverages.

“Instituting a sugary beverage tax may be an appealing public policy option to curb obesity, but it’s not as easy to use taxes to curb obesity as it is with smoking,” said Chen Zhen, PhD, Research Economist at RTI, and the paper’s lead author. “Consumers can simply substitute an untaxed high calorie food for a taxed one. And as we know, reducing calories is just one of many ways to promoting healthy eating and reducing nutrition-related chronic disease,” he said.

Science is increasingly finding that the relationship between food consumption and obesity is multifaceted. Australian Food News reported last week that Australian researchers had found that nerve endings in the stomach that tell the brain how full the body is are damaged in obese people, even after they lose weight. This could mean that people who have been obese still need to eat more to feel full, potentially leading to the kind of calorie substitution described in the US “soda tax” study.

Purchase behaviour differences based on income

The study also examined the differences in purchase behaviour between lower and higher income households. Compared to higher income families’ purchases, foods and beverages purchased by lower income families tended to be higher in calories, fat and sodium content on average.

“Because lower-income families tend to buy more sugary soft drinks than higher-income families, they would more readily reap the health benefits of reduced sugary beverage intake,” Mr Zhen said. “However, they would also pay more in beverage taxes, making it a regressive tax,” he said.

Study method

To conduct the study, researchers used data on household food purchases from the 2006 Nielsen Homescan panel, a large national consumer panel maintained by the Nielsen Company. Families in the panel are provided with a handheld scanner and instructed to scan the Universal Product Code (UPC) of products they purchased at retail outlets, record purchase quantities and coupons used and identify the retailer that the product was purchased from.

Obesity rates in the United States are about 36 percent for adults and 17 percent for children and adolescents. A previous RTI study found that medical costs associated with obesity are estimated at $147 billion or more per year.

The “soda tax” study was funded by the Robert Wood Johnson Foundation and the National Institutes of Health.

"Soda tax" not a clear cut strategy to reduce obesity