How will the introduction of the sugar tax affect the consumption habits of households in Poland?
Keywordsprice elasticity, sugar sweetened beverages, sugar tax, QUAIDS model
Motivation: Numerous scientific studies indicate a significant relationship between the number of sugar-sweetened beverages consumed and the problem of overweight and obesity. This, in turn, is a significant risk factor for many diseases, especially type 2 diabetes. Poland is a country where the consumption of sugar, especially in a processed form that is dangerous to health, is constantly growing. As a result, now two-thirds of the society are struggling with the problem of overweight, while obesity can be said in every fourth case, the forecasts are even more pessimistic. Recently, a fiscal policy with the use of the “sugar tax” is a popular tool to combat the growing consumption of sweetened beverages. The Polish government is also following this path, and the tax is scheduled to be in force at the beginning of 2021.
Aim: The aim of the study is to analyse the impact of the sugar tax on prices and, consequently, on the future consumption of sweetened beverages and other related goods.
Results: Based on the data of the Central Statistical Office concerning household expenditure in 2018, the complete demand model was estimated, considering demographic variables. As a result, the price and profit elasticities of demand for sweetened drinks and related goods were estimated. The results obtained in the study indicate that the introduction of the sugar tax will reduce the consumption of SSB, and the size of the changes depends on the analysed demographic factors. The decrease in consumption of sweetened beverages will increase the interest in beverages with a lower sugar content.
Aepli, M. (2014). Consumer demand for alcoholic beverages in Switzerland: a two-stage quadratic almost ideal demand system for low, moderate, and heavy drinking households. Agricultural and Food Economics, 2(1), 1–27. https://doi.org/10.1186/s40100-014-0015-0.
Attanasio, O., Di Maro, V., Lechene, V., & Phillips, D. (2013). Welfare consequences of food price increases: evidence from rural Mexico. Journal of Development Economics, 104, 136–151. https://doi.org/10.1016/j.jdeveco.2013.03.009.
Banks, J., Blundell, R., & Lewbel, A. (1997). Quadratic Engel curves and consumer demand. Review of Economics and Statistics, 79(4), 527–539. https://doi.org/10.1162/003465397557015.
Barrientos-Gutierrez, T., Zepeda-Tello, R., Rodrigues, E.R., Colchero-Aragones, A., Rojas-Martínez, R., Lazcano-Ponce, E., Mauricio Hernández-Ávila, M., & Meza, R. (2017). Expected population weight and diabetes impact of the 1-peso-per-litre tax on sugar-sweetened beverages in Mexico. Plos One, 12(5), e0176336. https://doi.org/10.1371/journal.pone.0176336.
Bernardi, N., Sevestre, P., Tépaut, M. & Vigneron, A. (2016) The impact of a ‘soda tax’ on prices: evidence from French micro data. Applied Economics, 48(41), 3976–3994. https://doi.org/10.1080/00036846.2016.1150946.
Bes-Rastrollo, M., Sayon-Orea, C., Ruiz-Canela, M., & Martinez-Gonzalez, M.A. (2016), Impact of sugars and sugar taxation on body weight control: a comprehensive literature review. Obesity, 24(7), 1410–1426. https://doi.org/10.1002/oby.21535.
Bíró, A. (2015). Did the junk food tax make the Hungarians eat healthier. Food Policy, 54, 107–115. https://doi.org/10.1016/j.foodpol.2015.05.003.
Blake, M.R., Lancsar, E., Peeters, A., & Backholer, K. (2019). Sugar-sweetened beverage price elasticity in a hypothetical convenience store. Social Science & Medicine, 225, 98–107. https://doi.org/10.1016/j.socscimed.2019.02.021.
Bødker, M., Pisinger, C., Toft, U., & Jørgensen, T. (2015). The Danish fat tax: effects on consumption patterns and risk of ischaemic heart disease. Preventive Medicine, 77, 200–203. https://doi.org/10.1016/j.ypmed.2015.03.031.
Breeze, P., Womack, R., Pryce, R., Brennan, A., & Goyder, E. (2018). The impact of a local sugar sweetened beverage health promotion and price increase on sales in public leisure centre facilities. Plos One, 13(5), e0194637. https://doi.org/10.1371/journal.pone.0194637.
Briggs, A.D., Mytton, O.T., Kehlbacher, A., Tiffin, R., Rayner, M., & Scarborough, P. (2013). Overall and income specific effects on the prevalence of overweight and obesity of 20% sugar sweetened drink tax in UK: econometric and comparative risk assessment modelling study. BMJ, 347, f6189. https://doi.org/10.1136/bmj.f6189.
Caro, J.C., Ng, S.W., Bonilla, R., Tovar, J., & Popkin, B.M. (2017a). Sugary drink taxation, projected consumption and fiscal revenues in Colombia: evidence from a QUAIDS model. Plos One, 12(12), e0189026. https://doi.org/10.1371/journal.pone.0189026.
Caro, J.C., Ng, S.W., Taillie L.S., & Popkin, B.M. (2017b). Designing a tax to discourage unhealthy food and beverage purchases: the case of Chile. Food Policy, 71, 86–100. https://doi.org/10.1016/j.foodpol.2017.08.001.
Cawley, J., Frisvold, D., Hill, A., & Jones, D. (2019). The impact of the Philadelphia beverage tax on purchases and consumption by adults and children. Journal of Health Economics, 67, 102225. https://doi.org/10.1016/j.jhealeco.2019.102225.
Claro, R.M., Levy, R.B., Popkin, B.M., & Monteiro, C.A. (2012). Sugar-sweetened beverage taxes in Brazil. American Journal of Public Health, 102(1), 178–183. https://doi.org/10.2105/ajph.2011.300313.
Colchero, M.A., Salgado J.C., Unar-Munguía, M., Hernández-Ávila, M., & Rivera-Dommarco, J.A. (2015). Price elasticity of the demand for sugar-sweetened beverages and soft drinks in Mexico. Economics & Human Biology, 19, 129–137. https://doi.org/10.1016/j.ehb.2015.08.007.
Cornelsen, L., & Smith, R.D. (2018). Viewpoint: Soda taxes: for questions economists need to address. Food Policy, 74, 138–142. https://doi.org/10.1016/j.foodpol.2017.12.003.
Cornelsen, L., Mazzocchi, M., & Smith, R.D. (2019), Fat tax or thin subsidy: how price increases and decreases affect the energy and nutrient content of food and beverage purchases in Great Britain. Social Science & Medicine, 230, 318–327. https://doi.org/10.1016/j.socscimed.2019.04.003.
Cox, T.L., & Wohlgenant, M.K. (1986). Prices and quality effects in cross-sectional demand analysis. American Journal of Agricultural Economics, 68(4), 908–919. https://doi.org/10.2307/1242137.
Deaton, A. (1988). Quality, quantity, and spatial variation of price. The American Economic Review, 78(3), 418–430.
Deaton, A., & Muellbauer, J. (1980a). An almost ideal demand system. The American Economic Review, 70(3), 312–326.
Deaton, A., & Muellbauer, J. (1980b). Economics and Consumer Behavior. Cambridge University Press.
Dharmasena, S., & Capps, O. (2012). Intended and unintended consequences of the proposed national tax on sugar-sweetened beverages to combat the U.S. obesity problem. Health Economics, 21(6), 669–694. https://doi.org/10.1002/hec.1738.
Escobar, M.A.C., Veerman, J.L., Tollman, S.M., Bertram, M.Y., & Hofman, K.J. (2013). Evidence that a tax on sugar-sweetened beverages reduces the obesity rate: a meta-analysis. BMC Public Health, 13(1), 1–10. https://doi.org/10.1186/1471-2458-13-1072.
Finkelstein, E.A., Zhen, C., Nonnemaker, J., & Todd, J.E. (2010). Impact of targeted beverage taxes on higher- and lower-income households. Archives of Internal Medicine, 170(22), 2028–2034. https://doi.org/10.1001/archinternmed.2010.449.
Guerrero-López, C.M., Unar-Munguía, M., & Colchero, M.A. (2017). Price elasticity of the demand for soft drinks, other sugar-sweetened beverages, and energy dense food in Chile. BMC Public Health, 17(1), 1–8. https://doi.org/10.1186/s12889-017-4098-x.
Harding, M., & Lovenheim, M. (2017). The effect of prices on nutrition: comparing the impact of product- and nutrient-specific taxes. Journal of Health Economics, 53, 53–71. https://doi.org/10.1016/j.jhealeco.2017.02.003.
Härkänen, T., Kotakorpi, K., Pietinen, P., Pirttilä, J., Reinivuo, H., & Suoniemi, I. (2014). The welfare effects of health-based food tax policy. Food Policy, 49(1), 196–206. https://doi.org/10.1016/j.foodpol.2014.07.001.
Jithitikulchai, T., & Andreyeva, T. (2018). Sugar-sweetened beverage demand and tax simulation for federal food assistance participants: a case of two new England states. Applied Health Economics and Health Policy, 16(4), 549–558. https://doi.org/10.1007/s40258-018-0399-1.
Lakkakula, P., Schmitz, A., & Ripplinger, D. (2016). U.S. sweetener demand analysis: a QUAIDS model application. Journal of Agricultural and Resource Economics, 41(3), 533–548.
Lecocq, S., & Robin, J.-M. (2015). Estimating almost-ideal demand systems with endogenous regressors. The Stata Journal, 15(2), 554–573. https://doi.org/10.1177/1536867x1501500214.
Lin, B.H., Smith, T.A., & Lee, Y.J. (2011). Measuring weight outcomes for obesity intervention strategies: the case of a sugar-sweetened beverage tax. Economics & Human Biology, 9(4), 329–341. https://doi.org/10.1016/j.ehb.2011.08.007.
Majumder, A., Ray, R., & Sinha, K. (2012). Calculating rural-urban food price differentials from unit values in household expenditure surveys: a comparison with existing methods and a new procedure. American Journal of Agricultural Economics, 94(5), 1218–1235. https://doi.org/10.1093/ajae/aas064.
Malik, V.S., Popkin, B.M., Bray, G.A., Després, J.P., & Hu, F.B. (2010). Sugar-sweetened beverages, obesity, type 2 diabetes mellitus, and cardiovascular disease risk. Circulation, 121(11), 1356–1364. https://doi.org/10.1161/circulationaha.109.876185.
Malik, V.S., Schulze, M.B., & Hu, F.B. (2006). Intake of sugar-sweetened beverages and weight gain: a systematic review. The American Journal Of Clinical Nutrition, 84(2), 274–288. https://doi.org/10.1093/ajcn/84.1.274.
Manyema, M., Veerman, L.J., Chola, L., Tugendhaft, A., Sartorius, B., Labadarios, D., & Hofman, K.J. (2014). The potential impact of a 20% tax on sugar-sweetened beverages on obesity in South African adults: a mathematical model. Plos One, 9(8), e105287. https://doi.org/10.1371/journal.pone.0105287.
Miller, C., Wakefield, M., Braunack-Mayer, A., Roder, D., O’Dea, K., Ettridge, K., & Dono, J. (2019). Who drinks sugar, sweetened beverages, and juice: an Australian population study of behaviour, awareness and attitudes. BMC Obesity, 6(1), 1–12. https://doi.org/10.1186/s40608-018-0224-2.
Paraje, G. (2016). The effect of price and socio-economic level on the consumption of sugar-sweetened beverages (SSB): the case of Ecuador. Plos One, 11(3), e0152260. https://doi.org/10.1371/journal.pone.0152260.
Pollak, R.A., & Wales, T.J. (1981) Demographic variables in demand analysis. Econometrica, 49(6), 1533–1551. https://doi.org/10.2307/1911416.
Ray, R. (1983). Measuring the cost of children: an alternative approach. Journal of Public Economics, 22(1), 89–102. https://doi.org/10.1016/0047-2727(83)90058-0.
Schmacker, R., & Smed, S. (2020). Do prices and purchases respond similarly to soft drink tax increases and cuts. Economics & Human Biology, 37, 100864. https://doi.org/10.1016/j.ehb.2020.100864.
Segovia, J., Orellana, M., Sarmiento, J.P., & Carchi, D. (2020). The effects of taxing sugar-sweetened beverages in Ecuador: an analysis across different income and consumption groups. Plos One, 15(10), e0240546. https://doi.org/10.1371/journal.pone.0240546.
Smed, S., Scarborough, P., Rayner, M., & Jensen, J.D. (2016). The effects of the Danish saturated fat tax on food and nutrient intake and modelled health outcomes: econometric and comparative risk assessment evaluation. European Journal of Clinical Nutrition, 70(6), 681–686. https://doi.org/10.1038/ejcn.2016.6.
Vecino-Ortiz, A.I., & Arroyo-Ariza, D. (2018). A tax on sugar sweetened beverages in Colombia: estimating the impact on overweight and obesity prevalence across socio-economic levels. Social Science & Medicine, 209, 111–116. https://doi.org/10.1016/j.socscimed.2018.05.043.
How to Cite
Copyright (c) 2021 Jacek Wolak
This work is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.
Number of views and downloads: 224
Number of citations: 0