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Freakonomics: Should We Have to Pay for Our Sins?

By April 21, 2022May 25th, 2022No Comments

From Freakonomics:

Taxes on alcohol and tobacco promise to make people healthier and raise public funds. But can they backfire? Bapu Jena looks at the complicated economics of sin taxes.

ROBERTO: For a long time in the U.S. we’ve had really an epidemic of chronic diseases and many of those are related to nutrition. Unhealthy diets contribute to obesity, type two diabetes, tooth decay

That’s Christina Roberto.

ROBERTO: I am the presidential associate professor of health policy. I’m at the University of Pennsylvania. I study food policies to try to promote healthy eating. And sugar-sweetened beverage taxes have gained a lot of traction lately.

One of the first people to propose a tax on so-called “low nutrition” foods  like sugar-sweetened beverages  was Kelly Brownell, a public policy and food policy expert who just happens to have been Christina’s mentor. In a 1994 op-ed in the New York Times, Brownell made the case that rising obesity rates were driven by the widespread availability of fatty, sugary foods, and that higher taxes on those items would help Americans lose weight.

ROBERTO: It got a lot of pushback, but I think that was the time where it sort of entered the national discourse and had been sort of floating around as — as something to think about. But this didn’t gain serious traction until the last decade or so.

In 2015, Berkeley, California was the first U.S. city to tax sugar-sweetened beverages: things like soda, sports and energy drinks, and fruit punch. Since then, several other cities have followed suit  including Philadelphia, where Christina lives and works. As with other sin taxes, the tax on sugar-sweetened beverages is meant, in a way, to save us from ourselves.

ROBERTO: So, we now have a good sense that when you implement these taxes, people buy fewer sugary drinks. And that seems good, but there’s this question of: are people just substituting, right? So, you buy less soda, but then you eat more Snickers bars. And we actually don’t see evidence that people are substituting to other sugary snacks. So, I think that’s really encouraging

Christina’s research has shown that sales of sugar-sweetened beverages have gone down in Philadelphia  by nearly 40 percent  since 2017, when the city imposed a 1.5 cent-per-ounce tax on those products. In Berkeley, water sales jumped by 29 percent in the three-year period after the sugary drink tax was enacted there. Whether this has translated to better health outcomes is harder to know.

ROBERTO: The truth is we don’t have great data on that yet. These taxes haven’t been around for that long to know how they’re going to really move the needle on things like type two diabetes.

Information from other countries may offer some insight, though.

ROBERTO: So, in Mexico, they implemented a country-wide tax on sugary drinks, and they were able to look at how price has changed in different cities and see how that translated to changes in body mass index among adolescent girls and adolescent boys. And what they found is about a 3 percent decline in body mass index among adolescent girls. No significant decline among boys. And that’s really the only data that we have at this point to suggest that these taxes may lead to some improvements in health.

Listen to this episode at Freakonomics.

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