Economist Tefft's research links 'soda tax' to small decrease in adult obesity rates

Do taxes and other surcharges on soft drinks actually have the intended effect: helping Americans lose weight by using a cost increase to discourage the drinking of sugary high-calorie beverages?

Yes, the taxes do work as intended — but their effect, while statistically significant, is small, according to pioneering research published this week by a Bates College economist and colleagues at Yale and Emory universities.

“If you raise soda taxes, population weight declines by a bit — but not a lot,” says Bates economist Nathan Tefft. “That’s the key” to the importance of the research. Tefft, assistant professor of economics at Bates, undertook the research with Jason Fletcher of Yale’s School of Public Health and David Frisvold of Emory’s economics department.

Their study, “Can Soft Drink Taxes Reduce Population Weight?” was published today by the journal Contemporary Economic Policy. (See an abstract with links to purchase the entire article.)

The study is the first empirical examination of the effectiveness of soft drink taxes in reducing adult weight. The researchers found that on average, a 1 percent increase in soft drink taxes corresponds with a decrease of .003 points in body mass index among adults.

(Relating height to weight as an assessment of body fat, a BMI between 18.5 and 24.9 is considered normal, 25 to 29.9 is overweight and 30 and above is obese.)

The study sounds a cautionary note amidst a trend among state governments to tax sugared drinks.

So if policymakers are thinking about imposing soft-drink taxes, Tefft believes that — at least at the tax rates the researchers studied — an intention to lower obesity rates isn’t the strongest argument for doing so. Those taxes are better justified, he says, by their revenue potential and by the fact that at best, soft drinks are empty calories and at worst, pose health threats unrelated to caloric content.

For instance, an August 2007 National Institutes of Health study links consumption of both sugared and diet soda to a 40 percent greater risk of “metabolic syndrome,” a cluster of conditions that increase the risk for heart disease.

With soft-drink consumption considered a major contributor to growing obesity rates, the study sounds a cautionary note amidst a trend among state governments to tax sugared drinks. More than 30 states tax soft drinks, according to the Bangor Daily News, although Maine voters recently repealed a tax on soda, beer and wine to help fund the state’s Dirigo Health program.

Why do the taxes have such a small impact on weight? For one thing, while soft drinks constitute the largest single source of calories consumed, they still amount to only 7 percent of those calories.

In addition, while soft-drink taxes are modeled after “sin taxes” on tobacco and alcohol, the medical arguments against those products are much clearer and more compelling. “With soda, it’s a looser argument,” Tefft suggests.

He adds, “An important aspect of this research, which we’re working on in our next paper, is that even if a tax successfully leads to reduction in consumption of soda, people may consume, for example, sports drinks, other sugared drinks or fruit juices instead.

“That doesn’t happen with alcohol or tobacco as much. That substitution is a real possibility here, so it becomes more difficult to use this as a health promotion tool.”

Tefft notes that the substitution issue is borne out in the threesome’s research into the connection between soda taxes and weight loss in children. “That’s probably even a more important group to look at,” he notes, because both lifelong dietary habits and a tendency to being overweight are formed early, and because kids have poorer self-control than adults.

With children, the team found “a decline in consumption, but we also found evidence of the substitution effect — for example, milk,” he says. “Milk is presumably healthier for you, but the calories in milk perhaps offset entirely the reduction in soda.”

The research was funded by the Robert Wood Johnson Foundation.

– Doug Hubley, Office of Communications and Media Relations