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Predicting the Effects of Sugar‐Sweetened Beverage Taxes on Food and Beverage Demand in a Large Demand System
Author(s) -
Zhen Chen,
Finkelstein Eric A.,
nemaker James M.,
Karns Shawn A.,
Todd Jessica E.
Publication year - 2014
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1093/ajae/aat049
Subject(s) - endogeneity , economics , calorie , instrumental variable , fluid ounce (us) , agricultural economics , consumption (sociology) , welfare , sugar , econometrics , food science , chemistry , medicine , market economy , social science , physics , sociology , thermodynamics , endocrinology
Abstract A censored Exact Affine Stone Index incomplete demand system is estimated for 23 packaged foods and beverages and a numéraire good. Instrumental variables are used to control for endogenous prices. A half‐cent per ounce increase in sugar‐sweetened beverage prices is predicted to reduce total calories from the 23 foods and beverages but increase sodium and fat intakes as a result of product substitution. The predicted decline in calories is larger for low‐income households than for high‐income households, although welfare loss is also higher for low‐income households. Neglecting price endogeneity or estimating a conditional demand model significantly overestimates the calorie reduction.