Non‐Pecuniary Effects of Sugar‐Sweetened Beverage Policies

Abstract

Debate about the economic impacts of sugar‐sweetened beverage (SSB) taxes have largely focused on pecuniary effects, but evidence has emerged that taxes could also convey information about what consumers “should” be doing. Disentangling the pecuniary and non‐pecuniary (or non‐price) effects using market data is a significant challenge. To address this issue, we study consumer choices in a simulated market environment in experimental conditions where we vary the reasons respondents are given for the cause of the price hike. We also study responses to a ban on large‐sized sodas, where the stated causes of the ban are randomly varied across respondents. We utilized random parameter logit models and use difference‐in‐difference estimates to identify the non‐pecuniary effect of a SSB tax and a large soda ban on SSB market shares. Our initial study, conducted in 2016, revealed significant non‐pecuniary effects, with soda choices falling less dramatically when subjects knew prices increased because of a soda tax. However, replications and extensions conducted in 2019 show no consistent non‐pecuniary effects. There is considerable heterogeneity across respondents in the difference‐in‐difference estimates, which is only partially explained by demographic or measured attitudinal variables. Results of this study emphasize the importance of carrying out replications and suggest, at least in the context of our experiment, non‐pecuniary effects are small relative to the traditional economic drivers.