New insights into the structure of consumer preferences for natural and artificial sweeteners

Abstract

AbstractThis study utilizes the Generalized Exact Affine Stone Index demand system to investigate the structure of demand for natural and artificial sweeteners in the United States based on uniquely disaggregate data. Our empirical framework allows for arbitrarily complex Engel curves, unobserved consumer heterogeneity and potential precommitments in sweetener consumption, while addressing price endogeneity. Results from a series of weak separability tests reveal that consumers select from among both sets of natural and artificial sweeteners. In addition, most sweeteners are empirically established to be consumed in precommitted quantities, with the shares thereof varying from 6.3% for molasses to 34.4% for granulated sugar. Based on the unconditional elasticities obtained via a two‐stage budgeting framework, we further examine the implications of hypothetical sweetener tax scenarios for consumer energy intake and bodyweight, as well as assess the consumer welfare consequences thereof.