I recently ran across this article published in Current Obesity Reports calling for more rigorous methods to assess the effects of soda and fat taxes. The article makes a number of good points, but it also misses many more complications that should be included for a rigorous evaluation - for example, how do firms respond when subjected to new food policies?
Another example comes to us via this paper in the Journal of Marketing by Debabrata Talukdar and Charles Lindsey. If you want to tax unhealthy foods and subsidize healthy ones, the authors suggest regulators may face an up hill battle because consumers are less sensitive to rising prices for unhealthy foods and falling prices for healthy foods than the reverse.
A portion of the abstract:
“The results from multiple studies confirm that consumers exhibit undesirable asymmetric patterns of demand sensitivity to price changes for healthy and unhealthy food. For healthy food, demand sensitivity is greater for a price increase than for a price decrease. For unhealthy food, the opposite holds true. The research further shows that the undesirable patterns are attenuated or magnified for key policy-relevant factors that have been shown to decrease or increase impulsive purchase behavior, respectively. As the rising obesity trend brings American consumers’ food consumption behavior under increased scrutiny, the focal findings hold significant implications for both public policy makers and food marketers. ”
They conclude:
“For public policy makers, our findings imply that the efficacy of economic policy interventions in inducing healthier food consumption behavior will be much more limited than what is expected under the conventional premise of symmetric patterns of demand response. This may warrant that public policy officials lower their level of expectations regarding the effectiveness of so-called sin tax initiatives in curbing demand for unhealthy food.”