A Natural Experiment For Philadelphia’s Soda Tax

The city of Philadelphia’s controversial soda tax is providing a lot of material for serious scientists to evaluate the effects of arbitrarily imposing a tax on the distribution of a range of naturally and artificially-sweetened beverages. Since we’re near the end of the tax’s first year of being in effect, we thought we’d focus upon one of the more interesting findings to date.
Consumers are primarily the ones paying the tax
Thanks to the quirks of geography and development, some parts of the terminals at Philadephia’s international airport fall within Philadelphia’s city limits while other parts do not, which means that Philadelphia’s Beverage Tax is imposed in some parts of the airport while not in others. Cornell University’s John Cawley recognized that situation would make for a natural experiment for assessing some of the impact of the tax, where they collected data for soda sales at the airport in the period of December 2016 through February 2017, which provides a window into how both prices and sales changed as the tax went into effect on 1 Janaury 2017. Here’s a summary of the research’s findings:
The research, co-written with Barton Willage, a doctoral candidate in economics, and David Frisvold of the University of Iowa, appeared Oct. 25 in JAMA: The Journal of the American Medical Association.
Philadelphia’s tax of 1.5 cents per ounce on sugar-sweetened beverages is one of several passed by cities throughout the United States. The goal is to increase prices and dissuade people from drinking soda to benefit their health. These taxes have been controversial; Cook County, Illinois, recently repealed its tax, which had only been in place a few months.

This post was published at Zero Hedge on Dec 26, 2017.

 

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