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Soda taxes don't raise money? Are they confusing purposes for a soda tax?

Pigouvian taxes are nothing new.

I also don't buy it. If tax is raised, it will discourage consumption. Or do incentives suddenly not matter?

They do matter. The simplest explanation for a low responsiveness of demand is that demand for sugary drinks is very inelastic. They discuss this explanation in the article if you want to know more.

It struck me as odd that the author of the piece didn't mention the level of taxation. That would seem like a rather important factor in determining whether taxes "work" or not. I'm pretty sure that if taxes are set at a high enough level, it's gonna have an impact on demand.

And it seems like he got the result he was looking for, which was perfectly illustrated when he said, "Generally speaking... the use of soda taxes often feels to me as a tactic used by some among the wealthy and educated, who are much less likely to abstain from drinking soda,* to wage a proxy culture war on the poor and uneducated, who are more likely to consume soda..."

A 5 cent tax is just the beginning. Around here it caused much controversy, but hey, it's only a nickel. Once the foothold is established, it can be raised, just like cigarette taxes. It is premature to evaluate the effect of soda taxes before they become well established at their ultimate price level.

Their inelasticity is dynamic; add 5 cents to a six pack or 2L bottle and it won't change anything, because all the substitutes are other sodas, and juice or tea is still a more expensive alternative.
Add $2 per six pack, and there will be a significant impact over time...but it would take time to take someone with a heavy soda habit to find their new substitutes.

I've never heard of one of these taxes being anywhere in the realm of cigarette taxes, i.e. doubling the price. This study confirms public health folks' prior that there needs to be a more aggressive government intervention (i.e. a much higher tax).

Not in the first round, no. But we shall see.

There are really two markets for soda: Grocery stores, and restaurants.

Restaurants (even fast food restaurants) add a huge markup to soda, so much so that soda often has a larger gross profit margin than anything else sold at the restaurant. A soda tax would have to be very large indeed to significantly change the price of restaurant soda and, in any case, restaurants have little incentive to discourage sales of their most profitable product.

I don't know what percentage of soda is sold through restaurants, but I'd assume it's significant. It's a very different market than grocery-store purchases, and it should be evaluated differently.

Hypothetical scenario:

Suppose a large sin tax were imposed on soda. Because soda consumption is apparently inelastic, this makes it a fairly efficient form of taxation. Furthermore, imagine the revenues generated from the tax are guaranteed to be used to reduce much more inefficient taxes (e.g. corporate, capital gains, or even income).

Would most of you go for the increased efficiency? Or does the moralizing aspect of a soda tax turn you off too much?

It is noted and recognized that the second assumption is unlikely to be true.

Efficient does not mean just. An across the board consumption tax would produce a more efficient result than a targeted consumption tax, so unless the target has a negative moral value, why target?

An across-the-board consumption task would be less efficient than a truly inelastic good (though I agree with the skepticism that soda is actually as inelastic as Tyler seems to suggest); its elasticity would be the average elasticity of consumption, and you can pick out individual goods that are less elastic than average, corresponding to less deadweight loss and less market distortion.

Opposite from efficiency arguments, a la Gruber you could claim that soda consumption has negative externalities (sugar -> obesity -> healthcare costs which are spread through private or public insurance), and taxing it captures some of those externalities. This only works as a justification if you reject the idea that soda consumption is inelastic, though.

What do you mean by efficiency? Correct me if I'm wrong but an across-the-board percentage tax should distort the market (individuals' choices) least, which should, in theory, be at least a local maximum for efficiency (local not global because of market failures). If you mean efficiency in terms of revenue... I have no idea.

Efficiency in terms of deadweight loss.

See here for an explanation:

An across the board tax, in contrast, is never really across the board (in terms of applied equally to all economic activity). An income tax, for instance, causes deadweight loss because of the elasticity of labor. I.e. a decrease in compensation translates directly into a decrease in work.

For inelastic goods--like, supposedly, soda--a tax doesn't change the overall amount of the good consumed, by definition, so the market ends up distorted less.

The moralizing aspect turns me off too much. There is no basis, other than the personal tastes of those who make the rules, for leveling a tax on soda as opposed to other goods with similar elasticities.

Having high body fat confers an extremely high number of negative externalities to others and thus should be punished. If that punishment decreases the behavior, then great! If it does not, then you're transferring wealth (in the case of taxation) from those that are exporting negative externalities to those that are not. Perfectly fine with me in a moral sense.

Now the big assumption here is that consumption of high sugar/calorie dense foods is associated with higher body fat. I think this is a relatively straightforward assumption. In an ideal world you could just directly tax deviation from an aesthetically and healthily ideal body fat %, but unfortunately that will never happen.

My point, even accepting all your premises about externalities as true, is that the tax is too arbitrary to be moral. We're probably just disagreeing about where to draw the line. I'm not opposed to all "sin" taxes, and I hope you accept that there should be limits on government's ability to tax some personal choices (e.g., a tax on watching television) even if externalities are created.

I love the authoritarian bootstrapping. We are great and generous people so we'll provide you with free healthcare. Your fat ass is costing us so much money, you need to be punished!

Maybe you should have kept your "charitable" impulse to yourself to begin with.

@ Lop, are you really implying that those that actively hurt society as a whole shouldn't be punished? There is literally nothing wrong with that.

@ FE, Yes I agree there should be limits, but I think that our country's overweight/obesity situation is far, far, far more disastrous than people realize. Most people just focus on the direct negatives (healthcare costs!) while ignoring the host of indirect societal negatives that cascade from the epidemic (e.g. IMO its partly responsible for historically low marriage rates)

Humans are selfish creatures that time and time again have proven they cannot put aside short-term gratification for long-term benefits. An authoritarian hand is the *only* thing that can correct maladaptive human characteristics.

Anon, have you looked into moving to Singapore?

Ugly people, which includes many obese, are repulsive. After all, no one wants them to be Oakland Raiders cheerleaders, do they? So how about requiring them to abstain from sodas and put up part of the cash for plastic surgery and gastric bypass operations? Or maybe take it out of their SNAP account.

Even in the hypothetical scenario that taxes on soda and other high sugar / caloric dense foods don't have a measurable impact on demand (hard to believe), I have absolutely no problem with extracting wealth from those that choose to carry high body fat (the implied assumption of course, that diets high in sugar and calorie dense foods are correlated with increased body fat - which I think is fairly accepted). There are a WIDE host of both direct and indirect negative externalities (economic and social) from an individual being overweight - I don't see a problem with punishing this behavior, even if it doesn't deter it in the future (again, hypothetical, as that's hard to believe).

My assumption is not that they want to discourage soda consumption, but maximize revenue.

Clearly soda taxes aren't working because the taxes, where implemented, are too low to have significant impact on a broad base of consumers. The contention that the demand for sodas is inelastic seems particularly inane (the rationale given is that there aren't substitutes for sweet, fizzy drinks...this of course due to the fact that we classify all sweet, fizzy drinks as...sodas). Slap a big fat tax on sodas and yes, consumption will go down. Not advocating it, just sayin'. I think it is also worth pointing out that it may not really be the aim of modest soda taxes to reduce broad based consumption, but rather to influence consumption among young people who may be more sensitive to small increases in price.

Right - a tax of one million dollars (said with pinkie in mouth) per drink will definitely reduce soda consumption. What is puzzling is why the OP did not mention taxes in his post. I would have expected a correlation perhaps with the amount of tax versus reduced consumption, but all he said was that soda taxes do not reduce consumption. Not very clear.

Trying to think of related soda policies, I wonder if anyone ever analyzed the impact of Michigan's relatively high (10 cents) bottle deposit on bottle returns compared to the 5 cent states, preferably for the period before curbside recycling was common.

I wonder about the goods substitution explanation. Is inability to find nearly exact substitutes often one of the primary causes of demand inelasticity? There are certainly many other ways to obtain calories, including from many other fluids, so the explanation strikes me at first glance to be weak.

4. I remind readers that it was Summers who, in his Okun Lecture in 2008 as the crisis was unfolding, blamed it on a Fed that wasn't sufficiently vigilant in addressing an inflation that was hidden from view, due mostly because economists like himself had helped overcome the Phillips Curve dilemma. He's come a long way fast, even if he does hide behind code words. But speaking in code words is a far cry from the many economists who attribute market distortions to all kinds of dubious causes (genetics), but can't seem to find any distortions as the result of very high levels of inequality.

What market distortions are attributed to genetics?

Don't ask questions, racist.

1) Taxing an inelastic good is a nice way to generate revenue for the government and likely stable over time.

Depends on what you mean by "nice."

The most inelastic goods: air, water.

edit: 'not being stabbed' is really inelastic.

#1 - as the article notes, the culture war is a big part of the soda taxes. Same with the local "fast food" bans, and SF's new byzantine rules against cookie cutter retailers. They're largely an attempt to impose a particular aesthetic preference by people with discriminating taste (like me!) on people without (like the rest of you cretins!) The theoretical health benefits are nice, but let's not kid ourselves that they're the true driving factor.


OK, so Fioccina's cool. The rest of you, though...

Urso, I think it is a subconscious bias. Some dishes that the upper class enjoy are more fattening that the despised burger and fries and yet are not held in disdain. A 12oz coke has about the same calories as a cappuccino ( ) but the coke has become a common thing and is thus despised (though Startbux has becom common and therefore despised already in some circles.) If you had never had anything like a McDonald's burger you might love it but it has become a common thing and is thus despised.
It is not so much that soda taxes are mostly about health but they are targets for health because of bias.

American barbarians. A real capuccino has about a quarter as much milk as the Starbucks imitation.

I don't disagree with anything that you're saying. But in a broader sense, I do think that we in the U.S. are clearly doing something wrong in having the obesity rates we do, compared to the rest of the OECD. At the risk of being called a liberal food fascist by some of the commenters here, I'll say that I think this is a problem that has gotten so out of hand that some serious nudging is overdue. In fact I'll even give it a libertarian flavor by saying, we can first and foremost stop with ag subsidies.

Now, now Floccina - the link you provide, to a *16* ounce Starbucks cappucino with 2% milk shows 120 Calories. Google says a 12 ounce Coke is 140 calories. As AB points out, a real cappucino is much less - especially if 12 ounces, and made with skim milk - like 50 calories.

In principle, would you support a plain calorie tax? One cent per ten calories. If indeed calories are an object of real public health concern.

My guess is no, though at least that gets around the cultural bigotry aspect and makes sure everyone's ox is gored.

J, I agree with you about ag subsidies, but note, not a single government anywhere has been able to reduce their citizen's overall obesity rates. Many things have been tried around the world, yet obesity rates keeps going up. What makes you think it can be done?


Tough to say. This is not an area where I'm an expert, so as far as details go I haven't done my homework and am more just shooting from the hip, so exactly which policies are empirically effective is something I'd like to outsource to someone who has looked at the relevant literature.

However I will say, obesity rates have gone up everywhere, but there is still a serious gap in absolute levels, and we can't really observe counterfactuals. Also my understanding is that NYC has lowered its obesity rates and raised life expectancy, though how much of that is a demographic shift I don't know.

Also I realize such a project is made much more difficult by the fact that we don't really know what is good and what is bad. Butter? Red meat? Carbs? Fat? etc. etc.

I am about to run out so apologies for the poorly-written verbal diarrhea.

Just get to the point: tax fat people and old people and women - the big drivers of health care expenditures. Get Gruber in here to make it sound palatable.

IS the infield fly rule a subject for law reviews, or bloggers?

I nominate Matt Levine as the best combo of a law review article and blogger.

Repeal the infield fly rule! Don't want to risk a DP? Stop popping the ball up.

Well I had to learn what a DP is in order to understand your comment, but I agree. It think people are afraid to let games evolve.

Presumably some time back in the stone ages, this tactic evolved and whichever team got the worse of it chucked a hissy fit not because it makes the game less interesting, but because they weren't able to adapt. That is the story behind bodyline bowling in cricket.

The problem is that it creates a coin-flip situation, where no matter what the players running on the ground do, the fielders can observe and respond appropriately. Pickle games are fun to watch but they generally mean someone screwed up.

Simply declaring the batter out gets rid of the coordination problem.

But the fielders can also screw up, and everyone's safe. The IF rule takes all the interest out of the play. It's as if in a rundown, the runner would automatically be called out. That's usually the end result anyway, but we should at least make them execute it.

Again, if you want to avoid a double play, just don't pop it up! No different than saying, if you want to avoid a double play, don't hit a sharp grounder right to the SS.

As a person who put in much more hours working to get better at basketball than some who became pros and where shorter than me, I say that talent is more important than work. If you are not agile, lean and quick forget it.

Is it my imagination or is Von Neumann answering questions from a very young Bill Clinton in that documentary?

Maybe someone should ask Bill. If you could find him.

Could sodas prices be below equilibrium before the tax?

Why is Coke (water, sugar, C02) cheaper per oz than club soda (water, CO2)? Economic mysteries abound.

Coke: (water + CO2 + corn syrup - corn subsidies - gauchery discount) ... Club soda (water + C02 + snootiness premium)

You've inspired me to open my own bar called the Gaucherie. We'll serve whatever is the exact opposite of tapas.

I guess my spelling means I'll be your first customer.

The opposite of like the Cheesecake Factory?

Golden Corral.


"Harried by busy schedules and paid on a piecework model, many doctors rush from visit to visit, avoid phone calls and emails that don’t generate payments, and often fail to address the complex social issues that hamper people’s health."

I might add often fail to address complicated health issues that don't generate a billing.

That's been my experience. Young and healthy, the doctors are great. Old, not so healthy, suffering from not so clear ailments, the doctors got no time. Suck it up.

I hope the model these folks are pursuing works.

It's better than what we usually get. It's concierge care without the concierge payment.

6. Interesting that PR is also an acronym for Pet Rock.

#4 Robert Moses' rebuttal . . . seems to reflect all the flaws in the man that Caro described.

Also, nice Do-er versus Critic framing with the adjacent Bernanke/Summers links

3: More proof that to succeed in academia, all you need is a knack for writing catchy titles.

The author was not an academic, but a law student. What's more, since the article was a student note, there was no byline - a policy that still holds sway at many law reviews (institutions whose rules are so byzantine and counterintuitive that they make the infield fly rule look like a model of common sense clarity). So he never got official credit for it.

I skipped the middle section but the concluding paragraph is a stack of horsesh*t you couldn't hit a flyball over.

I'm surprised that Summers refers to governments undertaking activities with positive NPV when real interest rates are low during a recession and before full recovery as "expansionary" policy. That is just NOT abandoning standard public investment theory out of deficit fears.

1. Require the most fatal junk food to have a warning lable that takes up three quarters of the package. Make less fatal junk food have a warning that takes up half the label. Mildly dangerous junk food can have a lable that takes up one quarter of the package, and only slightly dangerous food only needs a tiny warning. The criteria to determine what's what doesn't have to be perfect, but it does need to be consistent and can be tweaked as nutritional knowledge improves. With this system in effect producers of processed food have an incentive to spend a few cents a serve decreasing the deadliness of their food in order to win back branding space on their products. We're probably not going to get people to stop eating junk food, but we can encourage them to eat less deadly junk food. This approach could be combined with taxation if desired. Here in Australia fresh food is not taxed while processed food carries a 10% Goods and Services Tax. This helps with people's food choices in the margin, but a kilojoule of junk food is still far cheaper than a kilojoule of green salad or lean meat.

I would doubt that warning labels would have much of an effect:

"Anxiety is the intermediate goal of many risk communications, particularly public health communications. The primary goal is preventative behaviour "Many health promotions are based on [the] fear drive hypothesis […]. The fear-drive model is generally considered outdated in academic health psychology […] but it is worth considering as it remains a central, if unacknowledged, tenet of many health promotion campaigns. […] The fear-drive model principally proposes that fear is an unpleasant emotion and people are motivated to try to reduce their state of fear. Health promotion has taken this notion and applied it to communication. If a communication evokes fear or anxiety then the fear drive model suggests that the recipient will be motivated to reduce this unpleasant emotive state. If the communication also contains behavioural advice, either implicitly or explicitly, then individuals may follow this advice […] Fear is intuitively appealing as a means of promoting behavioural change but the role it plays in initiating behavioural change is not clear cut or consistent […]. However, this has been effectively denied […] by health professionals for over half a century. [...] One of the major attempts to reduce smoking has been the introduction of graphic warning labels on cigarette packets or on posters and billboards. […] there is very little evidence of the success of this form of approach. When politicians are asked for the evidence of such approaches there is much filibustering and some reference to dated research which does not stand up to scrutiny (Ruiter and Kok 2005). […] the evidence can be described as, at best, insubstantial."

The finding that providing health-related information to the public have limited impact on actual behaviours is common in public health, and applies to a variety of areas besides smoking, including exercise, alcohol consumption, and diet. In the dietary context, "Despite considerable efforts over a number of years, there is limited evidence to suggest that educational approaches to dietary change (that is providing basic information about what constitutes a ‘healthy’ diet) alter children’s eating habits".

All quotes are from the book The Psychology of Lifestyle, by Kathryn Thirlaway and Dominic Upton.

The warning lables may have an effect on people's decisions, but as I mentioned, the idea is to get manfacturers to reduce the lethality of the food they sell so they will be able to get a smaller label and so have more packaging space for branding. The large warning lables also provide clear information to consumers allowing them to easily see which category of unhealthiness a particular food falls into. Which is something which is lacking at the moment.

I should perhaps point out that a) I live in Denmark, where you get a lot of information when you buy most food items (calories, ingredients, etc.) which I assume is partly a result of legislation, and b) I have type one diabetes, which makes it sort of necessary for me to know what I put into my mouth. I'm not against information requirements, but extrapolating from the smoking context there's very little evidence that 'warning labels' make any difference; you can have information requirements without the moralism.

...and one I'm not unaware of the argument that even if information does not change people's consumption behaviours much, there's still an argument for having producers supply it, because it enables decision-making on part of consumers and makes it easier for those that do want to make healthy decisions to do so. The point I was trying to make was however that even if you require producers to add information, you should not be surprised if this information does not seem to have much of an effect on how healthily people behave; there are many reasons to believe that e.g. warning labels would not make a great difference (the book goes into a lot more detail about the reasons why this is the case).

US, I think you've missed my point. My suggestion is require large warning labels for very unhealthy food with food producers able to reduce the size of the warning labels if they make their food less unhealthy. The benefit to people's health comes from processed food manufacturers improving the health of their food in order to get a smaller label, so they'll have more room for branding. The warniing lables are to encourage food processors to produce healthier food, not to let consumers make better decisions. However, it may result in consumers making better decisions and also help that way.

In Australia nutritional information is required on packaging, but we're pretty dumb here. For the most part we don't know what it means and so it doesn't do us much good. But we are pretty good on pattern recognition. While most of us can't make sense of nutritional information, we can see how big warning labels are and choose the products with the smaller lables if we desire to improve our nutrition. Currently most of us are unable to make healthier choices when it comes to processed food because we just don't know what all those words and numbers on the packaging means.

5. Superb, particularly Teller's recollections at the end. Thanks.

19th c. conservative: "The common man is unfit to make his own decisions and should be ruled by aristocrats."
21st c. progressive: "That's horrible! Now let me tell you how to improve the common man by taxing him."

Only taxing uncommon men and not taxing common men is certainly a noble goal. However, if the unfortunate event of a common men being taxed does occur, then it would be best if that taxation occurs in such a was as to cause them the least harm. But just what that least harm method would be is not clear.


... his mind, the amulet on which he had always been able to rely, was becoming less dependable. Then came complete psychological breakdown; panic, screams of uncontrollable terror every night. His friend Edward Teller said, "I think that von Neumann suffered more when his mind would no longer function, than I have ever seen any human being suffer."

Von Neumann's sense of invulnerability, or simply the desire to live, was struggling with unalterable facts. He seemed to have a great fear of death until the last... No achievements and no amount of influence could save him now, as they always had in the past. Johnny von Neumann, who knew how to live so fully, did not know how to die.

ask me if i give n s, 'bout wtf u ever said 'bout nothng?

a buck talks 2u, nite time, fo whatever reason . . .

ask me if i give n s 'bout wtf u ever thought 'bout nothing? . . .

lil' poopies, i m still, talking 2u \

is ok, . . . , good songs flowing :)

more better 4u, big buck shows up sometimes and clears the bar . . .

step up 2 the plate, lil f faces . . .

scary city . . .

paulie talks 2u . . .

there are somethings 'bout the 0 to 1 number system that i haven't talked 2u 'bout

talk like that? u talk when u want2

specially! when the girls think u r swell :)

big buck, mumbles 2u, late at night . . .

ask me if i give n s 'bout wtf u ever said 'bout nothing if u never heard this women sing this song?

sorry 2have so much puck, i just got serious brain matter . . .

and a lotta nice girls have treated me right :) . . .

ask me if i give n s, 'bout wtf u ever thought 'bout nothing, when i hear a girl sing a song like this?

yo . . . , f u, f u, and f u

my girl is with me and we are singing some songs . . .

i do not like 2b a bully b cause all of my girlfriends were always such givers . . .

everybody else can go f u . . . :)

. . .

#3 (table tennis part) - there is something missing in the talent/hours debate and that is the endogeneity of abilities that are esteemed and competed in. Suppose that of the things people like to do well, you can get to the highest levels of some with work alone (mixing a great martini), some with talent alone (wiggling your ears) and some you need both (playing the violin well).

The skills that are most esteemed will be those that require both. We like to compete in things that not everybody can succeed in, and that nobody can succeed in without hard work.

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