Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/161388
Authors: 
Andalón, Mabel
Gibson, John
Year of Publication: 
2017
Series/Report no.: 
IZA Discussion Papers 10765
Abstract: 
Mexico's 'soda tax' has been predicted to reduce average weights by two to four pounds, based on extant estimates of an own-price elasticity of quantity demand for soda of between −1.0 and −1.3. These estimates ignore consumer responses on the quality margin and correlated measurement errors. We use Mexican household budget survey data and city-level soda prices to estimate unrestricted demand models that correct for both errors. The corrected own-price elasticity of quantity demand is just −0.2 to −0.3, so tax-induced soda price increases might cut average weights by less than one pound, which is too small to improve health.
Subjects: 
demand
household surveys
quality
price
soda taxes
Mexico
JEL: 
D12
I10
Document Type: 
Working Paper

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