Premium
Measuring Consumer Responses to a Bottled Water Tax Policy
Author(s) -
Berck Peter,
MoeLange Jacob,
Stevens Andrew,
VillasBoas Sofia
Publication year - 2016
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/aaw037
Subject(s) - bottled water , sales tax , measure (data warehouse) , business , economics , agricultural economics , ad valorem tax , tax reform , environmental science , public economics , environmental engineering , database , computer science
Using panel data of retail purchases, we measure the effects of the introduction, and later removal, of a bottled‐water tax in the state of Washington. We use a difference‐in‐differences approach to measure effects of the tax against untreated stores (in comparable control states) and untreated weeks (the pre‐period). We further estimate triple‐difference specifications comparing bottled water to juice and milk substitute products. Our results show that, when imposed, the tax causes bottled water sales to drop by nearly 6% in our preferred specification. Sales never fully recover, even after the tax removal. In terms of the heterogeneity of this effect, we find larger quantity drops in high tax rate areas and in the lowest and highest quintile income areas.