The effects of taxation on the individual consumption of sugar-sweetened beverages.

To assess the impact of taxation on the consumption of sugar-sweetened beverages (SSBs) most economic studies using household data consider the average consumer. Individual consumption is, however, very heterogeneous. In this paper, we propose a three-step methodology to evaluate the impact of SSB taxation on individual consumption. First, we use a disaggregation method to recover individual consumption from observed household consumption. Second, we estimate the demand for different categories of households. Finally, we simulate the impact of a tax policy on individual consumption. We find a high level of heterogeneity in consumption. Adults, both men and women, consume a greater quantity of SSBs than children. More importantly, for any given age category, the average consumption of SSBs increases with body mass index (BMI). Among heavy consumers of SSBs, obese and overweight people are over-represented. In France, a €0.20/l tax on SSBs might decrease sugar intake by more than 2 kg per year on average and by more than 5 kg, roughly 3 teaspoons/day, for 5% of the adult population. Moreover, overweight and obese men and women, who correspond to 41% of the adult population, represent 56% of the last five percentiles of the distribution of the variation in sugar intake. This is a key result because the objective of taxation is to decrease the consumption of individuals who are more at risk, that is those who are overweight and obese. We also show that classical method of the assessment of tax policies based on per-capita consumption underestimate the effect of the tax for obese adults by 9%. Finally, we estimate that a €0.20/l tax on SSBs might avoid about 640 deaths (about 1.6% of the considered diseases) as a consequence of the decrease in SSB consumption.

Accounting for consumers' preferences in the analysis of dietary recommendations.

BACKGROUND/OBJECTIVES: The goal of this article is to present and demonstrate the applicability of an original method to assess the economic and health impacts of compliance with food-based recommendations. The method takes account of consumers' preferences and the associated adoption cost in the assessment of various recommendations. SUBJECTS/METHODS: We combine an economic model of diet choice with an epidemiological model to compute the health impacts of dietary changes. To demonstrate the use of the method, we analyse the impacts of a 5% variation in the consumption of seven food groups taken separately: a 5% increase in consumption of fruits and vegetables (F&V) and milk products; and a 5% decrease in consumption of red meat, all meats, salty/sweet products, ready meals and butter/cream/cheese. RESULTS: A recommendation, when adopted by consumers, generates important changes in the whole diet due to substitutions and complementarities among foods. All simulated recommendations have a positive impact on health. The F&V recommendation has the largest impact on the number of DALYs averted, but the highest adoption cost for consumers, especially for low-income consumers. Alone, the change in energy intake explains from 71% to 98% of the DALYs averted induced by a recommendation. CONCLUSIONS: Small increases in recommended foods have the potential of generating relatively significant health gains. Preference-driven substitutions among foods have a major effect on simulated health outcomes and should be included in the assessment of dietary recommendations, together with the adoption cost borne by consumers.

Market Competition and the Health Composition of Manufactured Food.

There has been surprisingly little research to date on the supply-side role of food manufacturers on equilibrium health outcomes for consumers. In this letter we consider an oligopoly model in which food processors choose the health composition of manufactured food. We show that price competition between food processors leads to unhealthy food composition in the market equilibrium, even under circumstances in which consumers know food composition is unhealthy. Taxes on manufactured food decrease the healthiness of manufactured foods whenever improved consumer health increases the price elasticity of food demand. Copyright © 2016 John Wiley & Sons, Ltd.

Quality standards versus nutritional taxes: Health and welfare impacts with strategic firms.

The goal of this paper is to better understand firms' strategic reactions to nutritional policies targeting food quality improvements and to derive optimal policies. We propose a model of product differentiation, taking into account the taste and health characteristics of products. We study how two firms react to alternative policies: an MQS policy, linear taxation of the two goods on the market, and taxation of the low-quality good. The MQS and the taxation of the low-quality product are the preferred options by a social planner. If taste is moderately important, the MQS policy is chosen by a populist and a paternalist social planner. If taste is a major component of choice, the populist planner chooses to tax the low-quality product whereas the paternalist planner prefers the MQS policy. Finally, for a paternalist social planner, an MQS-based policy always allows for higher levels of welfare than an information policy alone.

Beyond Wishful Thinking: Integrating Consumer Preferences in the Assessment of Dietary Recommendations.

Convenience, taste, and prices are the main determinants of food choices. Complying with dietary recommendations therefore imposes a "taste cost" on consumers, potentially hindering adoption of those recommendations. The study presents and applies a new methodology, based on economic theory, to quantify this taste cost and assess the health and welfare effects of different dietary recommendations. Then, by comparison of those effects, we identify socially desirable recommendations that are most compatible with consumer preferences (i.e., that best balance health benefits against"taste cost") and should be prioritized for promotion. The methodology proceeds in three-steps: first, an economic-behavioral model simulates how whole diets would change if consumers complied with dietary recommendations; second, an epidemiological model estimates the number of deaths avoided (DA) due to the dietary change; third, an efficiency analysis weighs the health benefits against the taste and policy costs of each recommendation. The empirical model is calibrated using French data. We find that recommendations to reduce consumption of red meat and soft-drinks, or raise consumption of milk products and fish/seafood impose relatively moderate taste costs. By comparison, recommendations related to F&V consumption and, to a lesser extent, butter/cream/cheese, snacks, and all meats impose larger taste costs on consumers. The F&V recommendation is the costliest for consumers to comply with, but it also reduces diet-related mortality the most, so that a large budget could be allocated to promoting F&V consumption while keeping this policy cost-beneficial. We conclude that promotion of most dietary recommendations improves social welfare. Our framework complements the programming models available in nutrition and public health: those models are best used to identify dietary targets, following which our framework identifies cost-beneficial ways of moving towards those targets.

Economic assessment of nutritional recommendations.

The effect of consumers' compliance with nutritional recommendations is uncertain because of potentially complex substitutions. To lift this uncertainty, we adapt a model of consumer behaviour under rationing to the case of linear nutritional constraints. Dietary adjustments are derived from information on consumer preferences, consumption levels, and nutritional contents of foods. A calibration exercise simulates, for different income groups, how the French diet would respond to various nutrition recommendations, and those behavioural adjustments are translated into health outcomes through the DIETRON epidemiological model. This allows for the ex-ante comparison of the efficiency, equity and health effects of ten nutritional recommendations. Although most recommendations impose significant taste costs on consumers, they are highly cost-effective, with the recommendations targeting salt, saturated fat, and fruits and vegetables (F&V) ranking highest in terms of efficiency. Most recommendations are also economically progressive, with the exception of that targeting F&V.

Does the EU sugar policy reform increase added sugar consumption? An empirical evidence on the soft drink market.

Whereas National Health authorities recommend a decrease in the consumption of 'added' sugar, a reform on the sugar market will lead to a 36% decrease of the sugar price in the EU. Using French data on soft drinks purchases, this paper investigates the anticipated impact of this reform on the consumption of sugar-sweetened beverages. The reform of the EU sugar policy leads to a decrease in regular soft drink prices by 3% and varies across brands. To assess substitution within this food category, we use a random-coefficients logit model that takes into account a large number of differentiated products and heterogeneity in consumers' behavior. Results suggest that price changes would lead to an increase in market shares of regular products by 7.5% and to substitutions between brands to the benefit of products with the highest sugar content. On the whole, it would raise consumption of regular soft drinks by more than 1 litre per person per year and consumption of added sugar by 124 g per person per year, this increase being larger in households composed of overweight and obese individuals.

Increasing fruit and vegetable consumption: a cost-effectiveness analysis of public policies.

BACKGROUND: In many countries, consumption of fruits and vegetables (F&V) is below recommended levels. We quantify the economic and health effects of alternative policy (P) scenarios aiming to increase F&V consumption: (P1) 3.4% reduction in VAT, (P2) €100/year/person F&V stamp policy designed for low-income consumers (LIC) and (P3) €10 M information campaign. METHODS: An economic model of the F&V market provides F&V consumption variations to a health impact model, leading to the number of deaths avoided (DA) and life-years saved (LYS). We compare the cost per statistical DA and LYS, taking into account the public costs of alternative policies. This analysis is applied to France in 2006. RESULTS: Relative risks of death for one additional F&V portion are disease dependent (range: 0.84-0.99). The highest variations in F&V consumption levels (less than +10 g/day/person on average) and health effects (<+600 DA, <+10 000 LYS) are modest. The costs/LYS are smaller for information campaign (€3 k), followed by VAT reduction (€99 k) and food stamp policy (€403 k). However, the information campaign leads to less LYS than VAT reduction. The food stamp policy reduces health inequalities between LIC and others, whereas the other ones can increase them. CONCLUSION: Our results suggest that (i) LYS are larger with VAT reduction than F&V stamps policies, (ii) information campaigns are the most cost-effective and (iii) market forces can limit the impacts of public health policies designed to favour F&V consumption increase.