Should We Tax Soda? An Overview of Theory and Evidence

On Friday, November 2nd, Hunt Allcott, PhD, will present Should We Tax Soda? An Overview of Theory and Evidence as part of the Carolina Population Center 2018-2019 Interdisciplinary Research Seminar Series. Allcott is a Principal Researcher at Microsoft Research, an Associate Professor of Economics at New York University, a Research Associate at the National Bureau of Economic Research, and a Co-Editor of the Journal of Public Economics. He is a Scientific Director of ideas42, a think tank that applies insights from psychology and economics to business and policy design problems, an Affiliate of Poverty Action Lab, a network of researchers who use randomized evaluations to answer critical policy questions in the fight against poverty, and a Faculty Affiliate of E2e, a group of economists, engineers, and behavioral scientists focused on evaluating and improving energy efficiency policy. He was also a Contributing Author of the Intergovernmental Panel on Climate Change Fifth Assessment Report.
Professor Allcott is hosted by Carolina Population Center Fellows Shu Wen Ng and Lindsey Smith Taillie. Ng is an Associate Professor and Taillie is a Research Assistant Professor, both in the Department of Nutrition at UNC-Chapel Hill.

PRESENTATION ABSTRACT

Taxes on sugar-sweetened beverages (SSBs) are growing in popularity and have generated an active public debate. Are they a good idea? If so, how high should they be? Are such taxes regressive? Americans and some others around the world consume a remarkable amount of SSBs, and the evidence suggests that this generates significant health costs. Building on recent work by Allcott, Lockwood, and Taubinsky (2018) and others, we review the basic economic principles for an optimal sin tax on SSBs. The optimal tax depends on (1) externalities: uninternalized costs to the health system from SSB consumption; (2) internalities: costs consumers impose on themselves by overconsuming sweetened beverages due to poor nutrition knowledge or lack of self-control; and (3) regressivity: how much the financial burden and the internality benefits from the tax fall on the poor. We then summarize the empirical evidence on the key parameters that determine how large the tax should be, which suggests that SSB taxes can be welfare enhancing. We end with seven concrete suggestions for policymakers considering an SSB tax.

Curriculum Vita (PDF)

Instructors: To arrange for class attendance, contact Kate Allison (akalliso@email.unc.edu) by the Monday before the seminar

Streaming may be available and must be arranged at least one week in advance.

This seminar is part of the Carolina Population Center’s Interdisciplinary Research Seminar Series.