Multi-City Study Shows Beverage Taxes Raise Prices, Reduce and Shift Purchases

Publisher: Cambridge, MA: Mathematica
Oct 21, 2019
Authors
John Cawley, David Frisvold, and David Jones

In the past decade, taxes on sugar-sweetened beverages (or SSBs, which are drinks such as cola, soda, energy drinks, and fruit-flavored drinks that contain added sugar) have perhaps become the most widely adopted policy designed to improve diets and reduce diet-related chronic disease. Recommended by the World Health Organization, the American Academy of Pediatrics, the American Heart Association, and the American Public Health Association (among others), such taxes have been adopted by dozens of countries, including Mexico, Peru, Chile, the U.K., Ireland, France, Norway, South Africa, India, the Philippines, and Samoa. The U.S. does not have a national tax on SSBs, though Congress has considered such proposals over the past several years. Seven cities in the U.S. currently tax SSBs: Berkeley, California was the first, starting in 2015; it was joined in 2017 by Albany and Oakland, California; Boulder, Colorado; and Philadelphia, Pennsylvania; and in 2018 by Seattle, Washington and San Francisco, California.

To better understand the effects of these city-level beverage taxes, Mathematica undertook a multiyear, multi-city study to provide comprehensive information about their impacts on a wide range of important outcomes, including retail prices, purchases, and consumption. Our study examines both adults and children and focuses on populations with particularly high consumption of SSBs and diet-related chronic diseases (which includes African-American and Hispanic adults and children and families living in poverty). Our study also includes an analysis of strategic responses to the taxes, including cross-border shopping by consumers, and retailers changing the availability of various beverages. Relative to previous analyses of the city-level beverage taxes, our study contributes to the evidence base because it gathers a wide range of primary data, including in-person store audits of prices and product availability, interviews about beverage purchases with customers exiting stores, longitudinal household surveys regarding beverage consumption, and qualitative interviews with store owners. Notably, this is the first study to examine the impact of city beverage taxes on product availability or on children’s beverage consumption. We focus primarily on the racially and ethnically diverse cities of Philadelphia and Oakland, and examine in particular the effects on low-income and minority households. This brief summarizes the results of our study.