By Jacob Goldstein
The recession has left some state and local governments desperate for new sources of money. That’s giving new energy to an idea public-health types have been pushing for a while now: taxing sodas and other drinks with added sugar.
New York’s governor has called for a penny-per-ounce tax on sugar-sweetened beverages, and Philly’s mayor wants one that’s twice that high.
Some public-health experts argue that taxes like these could slow the rise in obesity rates. The beverage industry has called it “a money grab, pure and simple,” and says it’s a “myth” that taxing one type of product will affect obesity rates.
For both sides, there’s a fundamental economic question here: How much would a tax drive down consumption?
Economists call this issue “price elasticity of demand” — how much demand goes down as price increases. Price elasticity of demand is different for different products.
A study published this week in the Archives of Internal Medicine used data from a 20-year study to estimate that a 10% increase in the price of soda would lead to a 7% decrease in the amount of soda calories people consume.
A recent paper in the American Journal of Public Health pooled results from 14 previous studies and concluded that for the broad category of “soft drinks,” a 10% increase in prices would lead to an 8% decrease in consumption.
Sodas, sports drinks and the like only cost a few cents per ounce. So a penny-per-ounce tax could lead to a price hike of about 20%.
Price elasticity isn’t totally linear — a price hike of 20% wouldn’t reduce demand by exactly twice as much as a hike of 10%. Still, those recent studies suggest that a penny-per-ounce tax could drive down consumption of sugary beverages by well over 10%.
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March 10, 2010
1. Treat the Earth and all that dwell thereon with respect
2. Remain close to the Great Spirit
3. Show great respect for your fellow beings
4. Work together for the benefit of all Mankind
5. Give assistance and kindness wherever needed
6. Do what you know to be right
7. Look after the well-being of mind and body
8. Dedicate a share of your efforts to the greater good
9. Be truthful and honest at all times
10. Take full responsibility for your actions
March 10, 2010
Stacy Summary: The Truth About Squid . . .
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March 10, 2010
just picked up on an interesting article on Bloomberg:
http://www.bloomberg.com/apps/news?p…IczFiqp4&pos=2
Any thoughts on this ?
M_S
March 10, 2010
