Perspective
Ounces of Prevention — The Public Policy Case for Taxes on Sugared Beverages
N Engl J Med 2009; 360:1805-1808April 30, 2009
- Article
Sugar, rum, and tobacco are commodities which are nowhere necessaries of life, which are become objects of almost universal consumption, and which are therefore extremely proper subjects of taxation.
— Adam Smith, The Wealth of Nations, 1776The obesity epidemic has inspired calls for public health measures to prevent diet-related diseases. One controversial idea is now the subject of public debate: food taxes.
Forty states already have small taxes on sugared beverages and snack foods, but in the past year, Maine and New York have proposed large taxes on sugared beverages, and similar discussions have begun in other states. The size of the taxes, their potential for generating revenue and reducing consumption, and vigorous opposition by the beverage industry have resulted in substantial controversy. Because excess consumption of unhealthful foods underlies many leading causes of death, food taxes at local, state, and national levels are likely to remain part of political and public health discourse.
Sugar-sweetened beverages (soda sweetened with sugar, corn syrup, or other caloric sweeteners and other carbonated and uncarbonated drinks, such as sports and energy drinks) may be the single largest driver of the obesity epidemic. A recent meta-analysis found that the intake of sugared beverages is associated with increased body weight, poor nutrition, and displacement of more healthful beverages; increasing consumption increases risk for obesity and diabetes; the strongest effects are seen in studies with the best methods (e.g., longitudinal and interventional vs. correlational studies); and interventional studies show that reduced intake of soft drinks improves health.1 Studies that do not support a relationship between consumption of sugared beverages and health outcomes tend to be conducted by authors supported by the beverage industry.2
Sugared beverages are marketed extensively to children and adolescents, and in the mid-1990s, children's intake of sugared beverages surpassed that of milk. In the past decade, per capita intake of calories from sugar-sweetened beverages has increased by nearly 30% (see bar graph
Daily Caloric Intake from Sugar-Sweetened Drinks in the United States.)3; beverages now account for 10 to 15% of the calories consumed by children and adolescents. For each extra can or glass of sugared beverage consumed per day, the likelihood of a child's becoming obese increases by 60%.4 Taxes on tobacco products have been highly effective in reducing consumption, and data indicate that higher prices also reduce soda consumption. A review conducted by Yale University's Rudd Center for Food Policy and Obesity suggested that for every 10% increase in price, consumption decreases by 7.8%. An industry trade publication reported even larger reductions: as prices of carbonated soft drinks increased by 6.8%, sales dropped by 7.8%, and as Coca-Cola prices increased by 12%, sales dropped by 14.6%.5 Such studies — and the economic principles that support their findings — suggest that a tax on sugared beverages would encourage consumers to switch to more healthful beverages, which would lead to reduced caloric intake and less weight gain.
The increasing affordability of soda — and the decreasing affordability of fresh fruits and vegetables (see line graph
Relative Price Changes for Fresh Fruits and Vegetables, Sugars and Sweets, and Carbonated Drinks, 1978–2009.) — probably contributes to the rise in obesity in the United States. In 2008, a group of child and health care advocates in New York proposed a one-penny-per-ounce excise tax on sugared beverages, which would be expected to reduce consumption by 13% — about two servings per week per person. Even if one quarter of the calories consumed from sugared beverages are replaced by other food, the decrease in consumption would lead to an estimated reduction of 8000 calories per person per year — slightly more than 2 lb each year for the average person. Such a reduction in calorie consumption would be expected to substantially reduce the risk of obesity and diabetes and may also reduce the risk of heart disease and other conditions.Some argue that government should not interfere in the market and that products and prices will change as consumers demand more healthful food, but several considerations support government action. The first is externality — costs to parties not directly involved in a transaction. The contribution of unhealthful diets to health care costs is already high and is increasing — an estimated $79 billion is spent annually for overweight and obesity alone — and approximately half of these costs are paid by Medicare and Medicaid, at taxpayers' expense. Diet-related diseases also cost society in terms of decreased work productivity, increased absenteeism, poorer school performance, and reduced fitness on the part of military recruits, among other negative effects.
The second consideration is information asymmetry between the parties to a transaction. In the case of sugared beverages, marketers commonly make health claims (e.g., that such beverages provide energy or vitamins) and use techniques that exploit the cognitive vulnerabilities of young children, who often cannot distinguish a television program from an advertisement.
A third consideration is revenue generation, which can further increase the societal benefits of a tax on soft drinks. A penny-per-ounce excise tax would raise an estimated $1.2 billion in New York State alone. In times of economic hardship, taxes that both generate this much revenue and promote health are better options than revenue initiatives that may have adverse effects.
Objections have certainly been raised: that such a tax would be regressive, that food taxes are not comparable to tobacco or alcohol taxes because people must eat to survive, that it is unfair to single out one type of food for taxation, and that the tax will not solve the obesity problem. But the poor are disproportionately affected by diet-related diseases and would derive the greatest benefit from reduced consumption; sugared beverages are not necessary for survival; Americans consume about 250 to 300 more calories daily today than they did several decades ago, and nearly half this increase is accounted for by consumption of sugared beverages; and though no single intervention will solve the obesity problem, that is hardly a reason to take no action.
The full impact of public policies becomes apparent only after they take effect. We can estimate changes in sugared-drink consumption that would be prompted by a tax, but accompanying changes in the consumption of other foods or beverages are more difficult to predict. One question is whether the proportions of calories consumed in liquid and solid foods would change. And shifts among beverages would have different effects depending on whether consumers substituted water, milk, diet drinks, or equivalent generic brands of sugared drinks.
Effects will also vary depending on whether the tax is designed to reduce consumption, generate revenue, or both; the size of the tax; whether the revenue is earmarked for programs related to nutrition and health; and where in the production and distribution chain the tax is applied. Given the heavy consumption of sugared beverages, even small taxes will generate substantial revenue, but only heftier taxes will significantly reduce consumption.
Sales taxes are the most common form of food tax, but because they are levied as a percentage of the retail price, they encourage the purchase of less-expensive brands or larger containers. Excise taxes structured as a fixed cost per ounce provide an incentive to buy less and hence would be much more effective in reducing consumption and improving health. In addition, manufacturers generally pass the cost of an excise tax along to their customers, including it in the price consumers see when they are making their selection, whereas sales taxes are seen only at the cash register.
Although a tax on sugared beverages would have health benefits regardless of how the revenue was used, the popularity of such a proposal increases greatly if revenues are used for programs to prevent childhood obesity, such as media campaigns, facilities and programs for physical activity, and healthier food in schools. Poll results show that support of a tax on sugared beverages ranges from 37 to 72%; a poll of New York residents found that 52% supported a “soda tax,” but the number rose to 72% when respondents were told that the revenue would be used for obesity prevention. Perhaps the most defensible approach is to use revenue to subsidize the purchase of healthful foods. The public would then see a relationship between tax and benefit, and any regressive effects would be counteracted by the reduced costs of healthful food.
A penny-per-ounce excise tax could reduce consumption of sugared beverages by more than 10%. It is difficult to imagine producing behavior change of this magnitude through education alone, even if government devoted massive resources to the task. In contrast, a sales tax on sugared drinks would generate considerable revenue, and as with the tax on tobacco, it could become a key tool in efforts to improve health.
No potential conflict of interest relevant to this article was reported.
This article (10.1056/NEJMp0902392) was published at NEJM.org on April 8, 2009.
Source Information
Dr. Brownell is a professor and director of the Rudd Center for Food Policy and Obesity, Yale University, New Haven, CT. Dr. Frieden is the health commissioner for the City of New York.
- References
References
1
Vartanian LR ,Schwartz MB ,Brownell KD . Effects of soft drink consumption on nutrition and health: a systematic review and meta-analysis. Am J Public Health 2007;97:667-675
CrossRef | Web of Science | Medline2
Forshee RA, Anderson PA, Storey ML. Sugar-sweetened beverages and body mass index in children and adolescents: a meta-analysis. Am J Clin Nutr 2008:87:1662-71.
3
Nielsen SJ ,Popkin BM . Changes in beverage intake between 1977 and 2001. Am J Prev Med 2004;27:205-210[Erratum, Am J Prev Med 2005;28:413.]
CrossRef | Web of Science | Medline4
Ludwig DS ,Peterson KE ,Gortmaker SL . Relation between consumption of sugar-sweetened drinks and childhood obesity: a prospective, observational analysis. Lancet 2001;357:505-508
CrossRef | Web of Science | Medline5
Elasticity: big price increases cause Coke volume to plummet. Beverage Digest. November 21, 2008:3-4.
- Citing Articles (61)
Citing Articles
1
Taryn W. Morrissey. (2012) Health Reform and Child Health: Progress, Cautions, and Future Directions. Child Development Perspectivesno-no
CrossRef2
Cheryl Rivard, Danielle Smith, Susan E McCann, Andrew Hyland. (2012) Taxing sugar-sweetened beverages: a survey of knowledge, attitudes and behaviours. Public Health Nutrition1-7
CrossRef3
C. Boizot-Szantai, F. Etilé. (2012) Taxer les boissons sucrées pour lutter contre l’obésité? Le point de vue de l’économie. Obésité
CrossRef4
Rafael M. Claro, Renata B. Levy, Barry M. Popkin, Carlos A. Monteiro. (2012) Sugar-Sweetened Beverage Taxes in Brazil. American Journal of Public Health 102:1, 178-183
CrossRef5
Andrew A. Bremer, Robert H. Lustig. (2012) Effects of Sugar-Sweetened Beverages on Children. Pediatric Annals 41:1, 26-30
CrossRef6
Jeff Niederdeppe, Norman Porticella, Michael A. Shapiro. (2012) Using Theory to Identify Beliefs Associated With Support for Policies to Raise the Price of High-Fat and High-Sugar Foods. Journal of Health Communication 17:1, 90-104
CrossRef7
Fabrice Etilé. (2012) La taxation nutritionnelle comme outil de santé publique : justifications et effets attendus. Cahiers de Nutrition et de Diététique
CrossRef8
Shu Wen Ng, Cliona Ni Mhurchu, Susan A. Jebb, Barry M. Popkin. (2011) Patterns and trends of beverage consumption among children and adults in Great Britain, 1986–2009. British Journal of Nutrition1-16
CrossRef9
Ryan D. Edwards. (2011) Sugar-sweetened beverage taxes raise demand for substitutes and could even raise caloric intake. Preventive Medicine
CrossRef10
Biing-Hwan Lin, Travis A. Smith, Jonq-Ying Lee, Kevin D. Hall. (2011) Measuring weight outcomes for obesity intervention strategies: The case of a sugar-sweetened beverage tax. Economics & Human Biology 9:4, 329-341
CrossRef11
Sandeep P. Kishore, Karen R. Siegel, Aria Ahmad, Amina A. Aitsi-Selmi, Mohammed K. Ali, Phillip Baker, Sanjay Basu, Asaf Bitton, Gerald S. Bloomfield, Gene Bukhman, Eleanor Emery, Andrea B. Feigl, Karen Grepin, Mark D. Huffman, Kiti Kajana, Shweta Khandelwal, Kavitha Kolappa, Chenhui Liu, Naaznin Lokhandwala, Vishal Marwah, Modi Mwatsama, Nicole Novak, Shantanu Nundy, Paul H. Park, Cristina Parsons Perez, Matthew R. Price, Nikka Rapkin, Hester Rice, Ben Seligman, Sumit Shah, Joao da Silva, Devi Sridhar, David Stuckler, Rajesh Vedanthan, Justin Zaman. (2011) Youth Manifesto on Non-Communicable Diseases. Global Heart 6:4, 201-210
CrossRef12
C. Peter Herman, Janet Polivy. (2011) Self-Regulation and the Obesity Epidemic. Social Issues and Policy Review 5:1, 37-69
CrossRef13
Sean C. Lucan, Frances K. Barg, Alison Karasz, Christina S. Palmer, Judith A. Long. (2011) Concepts of Healthy Diet Among Urban, Low-Income, African Americans. Journal of Community Health
CrossRef14
Nathalie Moise, Enrique Cifuentes, Emanuel Orozco, Walter Willett. (2011) Limiting the consumption of sugar sweetened beverages in Mexico's obesogenic environment: A qualitative policy review and stakeholder analysis. Journal of Public Health Policy 32:4, 458-475
CrossRef15
Lewis, Kristina H., Rosenthal, Meredith B., . (2011) Individual Responsibility or a Policy Solution — Cap and Trade for the U.S. Diet?. New England Journal of Medicine 365:17, 1561-1563
Full Text16
Helena Kobe, Matevž Štimec, Cirila Hlastan Ribič, Nataša Fidler Mis. (2011) Food intake in Slovenian adolescents and adherence to the Optimized Mixed Diet: a nationally representative study. Public Health Nutrition1-9
CrossRef17
Jessica L. Thomson, Lisa M. Tussing-Humphreys, Stephen J. Onufrak, Carol L. Connell, Jamie M. Zoellner, Margaret L. Bogle, Kathy Yadrick. (2011) Simulated reductions in consumption of sugar-sweetened beverages improves diet quality in Lower Mississippi Delta adults. Food & Nutrition Research 55:0,
CrossRef18
John Cawley, Chad Meyerhoefer. (2011) The medical care costs of obesity: An instrumental variables approach. Journal of Health Economics
CrossRef19
Tracey Pérez Koehlmoos, Shahela Anwar, Alejandro Cravioto. (2011) Global Health: Chronic Diseases and Other Emergent Issues in Global Health. Infectious Disease Clinics of North America 25:3, 623-638
CrossRef20
Kimberly Clabaugh, Geri B. Neuberger. (2011) Research Evidence for Reducing Sugar Sweetened Beverages in Children. Issues in Comprehensive Pediatric Nursing 34:3, 119-130
CrossRef21
Claudia Chaufan, Patrick Fox, Gee Hee Hong. (2011) Food for thought: menu labeling as obesity prevention public health policy. Critical Public Health 21:3, 353-358
CrossRef22
Peter Anderson, Oliver Harrison, Cary Cooper, Eva Jané-Llopis. (2011) Incentives for Health. Journal of Health Communication 16:sup2, 107-133
CrossRef23
Jennifer L Pomeranz. (2011) Advanced policy options to regulate sugar-sweetened beverages to support public health. Journal of Public Health Policy
CrossRef24
Nicola T. Sumorok, John R. Asplin, Brian H. Eisner, Marshall L. Stoller, David S. Goldfarb. (2011) Effect of diet orange soda on urinary lithogenicity. Urological Research
CrossRef25
Nicholas Freudenberg, John McDonough, Emma Tsui. (2011) Can a Food Justice Movement Improve Nutrition and Health? A Case Study of the Emerging Food Movement in New York City. Journal of Urban Health 88:4, 623-636
CrossRef26
Boyd A Swinburn, Gary Sacks, Kevin D Hall, Klim McPherson, Diane T Finegood, Marjory L Moodie, Steven L Gortmaker. (2011) The global obesity pandemic: shaped by global drivers and local environments. The Lancet 378:9793, 804-814
CrossRef27
C. Ni Mhurchu, H. Eyles, R. Dixon, L. Matoe, T. Teevale, P. Meagher-Lundberg. (2011) Economic incentives to promote healthier food purchases: exploring acceptability and key factors for success. Health Promotion International
CrossRef28
Ashley N. Gearhardt, Carlos M. Grilo, Ralph J. DiLeone, Kelly D. Brownell, Marc N. Potenza. (2011) Can food be addictive? Public health and policy implications. Addiction 106:7, 1208-1212
CrossRef29
Tatiana Andreyeva, Frank J. Chaloupka, Kelly D. Brownell. (2011) Estimating the potential of taxes on sugar-sweetened beverages to reduce consumption and generate revenue. Preventive Medicine 52:6, 413-416
CrossRef30
Frank J. Chaloupka, Lisa M. Powell, Jamie F. Chriqui. (2011) Sugar-sweetened beverages and obesity prevention: Policy recommendations. Journal of Policy Analysis and Management 30:3, 662-664
CrossRef31
Jason M. Fletcher, David E. Frisvold, Nathan Tefft. (2011) Are soft drink taxes an effective mechanism for reducing obesity?. Journal of Policy Analysis and Management 30:3, 655-662
CrossRef32
Frank J. Chaloupka, Lisa M. Powell, Jamie F. Chriqui. (2011) Sugar-sweetened beverages and obesity: The potential impact of public policies. Journal of Policy Analysis and Management 30:3, 645-655
CrossRef33
M. Baudet, C. Daugareil, J. Ferrieres. (2011) Prévention des maladies cardiovasculaires et règles hygiéno-diététiques. Annales de Cardiologie et d'Angéiologie
CrossRef34
Earl S. Ford, Simon Capewell. (2011) Proportion of the Decline in Cardiovascular Mortality Disease due to Prevention Versus Treatment: Public Health Versus Clinical Care. Annual Review of Public Health 32:1, 5-22
CrossRef35
A. M. Thow, C. Quested, L. Juventin, R. Kun, A. N. Khan, B. Swinburn. (2011) Taxing soft drinks in the Pacific: implementation lessons for improving health. Health Promotion International 26:1, 55-64
CrossRef36
RYAN D. LACANILAO, SEAN B. CASH, WIKTOR L. ADAMOWICZ. (2011) Heterogeneous Consumer Responses to Snack Food Taxes and Warning Labels. Journal of Consumer Affairs 45:1, 108-122
CrossRef37
Jennifer L. Pomeranz, Kelly D. Brownell. (2011) Advancing Public Health Obesity Policy Through State Attorneys General. American Journal of Public Health 101:3, 425-431
CrossRef38
Jamie F. Chriqui, Jean C. O'Connor, Frank J. Chaloupka. (2011) What Gets Measured, Gets Changed: Evaluating Law and Policy for Maximum Impact. The Journal of Law, Medicine & Ethics 39, 21-26
CrossRef39
Barry M. Popkin. (2011) Contemporary nutritional transition: determinants of diet and its impact on body composition. Proceedings of the Nutrition Society 70:01, 82-91
CrossRef40
Varman T. Samuel. (2011) Fructose induced lipogenesis: from sugar to fat to insulin resistance. Trends in Endocrinology & Metabolism 22:2, 60-65
CrossRef41
John Cawley, Christopher J. Ruhm. 2011. The Economics of Risky Health Behaviors. , 95-199.
CrossRef42
Anne Marie Thow, Peter Heywood, Stephen Leeder, Lee Burns. (2011) The global context for public health nutrition taxation. Public Health Nutrition 14:01, 176-186
CrossRef43
Angelina R. Sutin, Paul T. Costa, Manuela Uda, Luigi Ferrucci, David Schlessinger, Antonio Terracciano. (2010) Personality and metabolic syndrome. AGE 32:4, 513-519
CrossRef44
Anwar T Merchant, Avnish Tripathi, Farhan Pervaiz. (2010) Available energy from soft drinks: more than the sum of its parts. Public Health Nutrition 13:12, 1997-1999
CrossRef45
Claudia Chaufan, Gee Hee Hong, Patrick Fox. (2010) “Sin-Food” Taxes and Sugar-Sweetened Beverages—The Right Policy for the Wrong Reasons?. American Journal of Health Promotion 25:2, 87-90
CrossRef46
Gilman D. Grave, Terry T-K. Huang, Yvonne T. Maddox. (2010) Working Together to Reduce Pediatric Obesity. Bariatric Nursing and Surgical Patient Care 5:3, 197-202
CrossRef47
Jonathan D. Shenkin, Michael F. Jacobson. (2010) Using the Food Stamp Program and Other Methods to Promote Healthy Diets for Low-Income Consumers. American Journal of Public Health 100:9, 1562-1564
CrossRef48
Jason P. Block, Amitabh Chandra, Katherine D. McManus, Walter C. Willett. (2010) Point-of-Purchase Price and Education Intervention to Reduce Consumption of Sugary Soft Drinks. American Journal of Public Health 100:8, 1427-1433
CrossRef49
Anne Marie Thow, Stephen Jan, Stephen Leeder, Boyd Swinburn. (2010) The effect of fiscal policy on diet, obesity and chronic disease: a systematic review. Bulletin of the World Health Organization 88:8, 609-614
CrossRef50
Valisa E. Hedrick, Dana L. Comber, Paul A. Estabrooks, Jyoti Savla, Brenda M. Davy. (2010) The Beverage Intake Questionnaire: Determining Initial Validity and Reliability. Journal of the American Dietetic Association 110:8, 1227-1232
CrossRef51
Joan C Han, Debbie A Lawlor, Sue YS Kimm. (2010) Childhood obesity. The Lancet 375:9727, 1737-1748
CrossRef52
Thomas R. Frieden. (2010) A Framework for Public Health Action: The Health Impact Pyramid. American Journal of Public Health 100:4, 590-595
CrossRef53
Barry M. Popkin. (2010) Patterns of beverage use across the lifecycle. Physiology & Behavior 100:1, 4-9
CrossRef54
Richard D. Mattes. (2010) Foreword: Symposium on beverages and health. Physiology & Behavior 100:1, 1-3
CrossRef55
Andrew S Bomback, Vimal K Derebail, David A Shoham, Cheryl A Anderson, Lyn M Steffen, Wayne D Rosamond, Abhijit V Kshirsagar. (2010) Sugar-sweetened soda consumption, hyperuricemia, and kidney disease. Kidney International 77:7, 609-616
CrossRef56
Tatiana Andreyeva, Michael W. Long, Kelly D. Brownell. (2010) The Impact of Food Prices on Consumption: A Systematic Review of Research on the Price Elasticity of Demand for Food. American Journal of Public Health 100:2, 216-222
CrossRef57
Chaufan, Claudia, Hong, Gee Hee, Fox, Patrick, . (2009) Taxing “Sin Foods” — Obesity Prevention and Public Health Policy. New England Journal of Medicine 361:24,
Full Text58
Connie Mobley, Teresa A. Marshall, Peter Milgrom, Susan E. Coldwell. (2009) The Contribution of Dietary Factors to Dental Caries and Disparities in Caries. Academic Pediatrics 9:6, 410-414
CrossRef59
Brownell, Kelly D., Farley, Thomas, Willett, Walter C., Popkin, Barry M., Chaloupka, Frank J., Thompson, Joseph W., Ludwig, David S., . (2009) The Public Health and Economic Benefits of Taxing Sugar-Sweetened Beverages. New England Journal of Medicine 361:16, 1599-1605
Full Text60
Mary Story, James F. Sallis, C. Tracy Orleans. (2009) Adolescent Obesity: Towards Evidence-Based Policy and Environmental Solutions. Journal of Adolescent Health 45:3, S1-S5
CrossRef61
Oberlander, Jonathan, . (2009) Picking the Right Poison — Options for Funding Health Care Reform. New England Journal of Medicine 360:20, 2045-2048
Full Text
