Are SSB taxes good or bad for the poor?

In an economic sense, the optimal soda tax is surprisingly high, even if one values economic redistribution and opposes "regressivity" in the tax system, according to a recent NBER working paper from Hunt Allcott, Benjamin Lockwood, and Dmitry Taubinsky.

The three economists recognize that sugar sweetened beverage (SSB) consumption may have a larger budget share for poor consumers than for rich consumers, but, somewhat offsetting this pattern, they consider the possibility that low-income consumers are more responsive to price -- that they have a larger "own-price elasticity" -- enabling them to avoid a larger share of the tax burden, compared to middle- and high-income people. In the end, the authors find that an optimal national tax might be about one or two cents per ounce, equal to or slightly higher than current municipal taxes in Berkeley, Philadelphia, and elsewhere.

This paper relates to an interesting debate over several years in the progressive media, which arises because of the possible tension between public interest goals, including public health nutrition goals on the one hand and anti-poverty goals on the other. For example, Bernie Sanders in 2016 opposed soda taxes, but Anna Lappé wrote in Mother Jones encouraging him to reconsider and support these taxes. Similarly, in 2017, Max Sawicky wrote in In These Times opposing such taxes, while Tom Philpott favored support.

In research in the American Journal of Public Health in January, my colleagues and I estimated the costs and effects of a national penny-per-ounce SSB tax separately for multiple stakeholders: including both richer and poorer groups of consumers, employers (who save money in health care costs with the tax), SSB producers (who lose out especially if they must absorb part of the tax and cannot pass the full value onto consumers), and the government (which wins twice, once from the tax revenue and once from the healthcare cost savings in public insurance programs such as Medicaid).

Clearly, it is not enough to compute effects for an "average person" when studying SSB taxes. Yet, even when we consider the interests of multiple income groups in society, the merits of such taxes may be surprisingly strong.

In These Times.

SSB taxes from the distinct perspectives of diverse stakeholder groups

Previous studies found sugar-sweetened beverage taxes are cost-effective from the societal perspective. Our new article in the American Journal of Public Health argues that policy-making in a democracy depends on costs and benefits for particular stakeholders.

By the numbers: word counts in CDC nominee Brenda Fitzgerald's column for Coca-Cola

The Trump administration last week named Georgia Public Health Commissioner Brenda Fitzgerald as the next leader of the Centers for Disease Control and Prevention (CDC), a crucial federal public health agency. The CDC is based in Atlanta, so she won't have to move far.

Politico's Morning Agriculture briefing today noted that Dr. Fitzgerald has previously worked with projects that received $1.4 million dollars from the Coca-Cola Company, also based in Atlanta. Politico gives credit to a tweet from Russ Greene for noting her contribution of a 2013 column on childhood obesity to the Coca-Cola website.

Dr. Fitzgerald's column on childhood obesity follows the traditional sugar-sweetened beverage industry script with perfect rectitude, to an extent that seems remarkable for a public health official. The industry's story line prefers to emphasize physical activity rather than sugar or beverage intake as risk factors for childhood obesity, and in particular never to mention the association between sugar intake and Type II diabetes. Here are my word count statistics for Dr. Fitzgerald's column:

• obesity: 4
• health or healthier: 6
• movement or moving: 7
• physical activity: 6
• diabetes: 4
• beverage: 0
• soda: 0
• sugar: 0
• sweet or sweetened: 0
• calories: 0
• intake: 0
• consume or consumption: 1 (a reference to fruits and vegetables!)

From a sugar-sweetened beverage industry perspective, it's a perfect score.

Berkeley "soda tax" reduced sugar-sweetened beverage consumption and increased water consumption

In the American Journal of Public Health this month, Jennifer Falbe and colleagues found that the penny-per-ounce Berkeley soda tax succeeded in reducing sugar-sweetened beverage (SSB) consumption.

The study asked respondents about soda intake, in Berkeley and in comparison cities of northern California (Oakland and San Francisco, which did not have a new tax), before and after the new Berkeley tax was implemented in March 2015. The findings were remarkable. SSB consumption fell 21% in Berkeley and rose 4% in the comparison cities during the same period.

The SSBs include caloric soda, of course, but also some kinds of other sweetened drinks. However, for various reasons (including sound nutrition reasons plus perhaps political reasons), the tax did not affect milk drinks or 100% fruit juice. Therefore, it is important to understand what other beverages people substituted for soda. The study does not answer all my questions on this point, but it did find that water consumption increased in Berkeley at the same time that SSB consumption fell. Water consumption increased 63% in Berkeley, significantly more than the increase in the comparison cities during the same period. This was reassuring.

A good way to standardize estimates of tax effects is to report an "elasticity" -- the percentage change in consumption for each 1% change in price. A typical elasticity estimate for soda is about -1.2, meaning that the price increase in Berkeley (about 8%) would have been expected to generate a consumption decline of about 10%. The authors took care to confirm that the estimated consumption decline of 21% was significantly different from zero, which is the standard statistical way of making sure the estimates were not a random statistical fluke, but they cannot really be sure the true impact is exactly 21% rather than 10%. They sensibly discussed the possibility that "early reaction to the tax ... could rebound and settle closer to a 10% reduction in consumption."

Even if the impact were a 10% reduction, this study has important public health implications, providing I think the strongest evidence so far that a tax would reduce SSB consumption.

I encourage my colleagues in agricultural and applied economics to read this study. There is a long tradition in my profession of doubting the potential impact of such taxes. In the Washington Post in 2015, Tamar Haspel quoted University of Minnesota applied economist Marc Bellemare saying the results at that time were "not robust." Haspel also quoted my Friedman School colleague and friend Sean Cash saying that product formulation, rather than taxes, are the way to go: "If we could achieve a 5 percent reduction by reformulation, that would swamp what we can achieve with consumer-level intervention.” The TuftsNOW site quoted Sean casting further doubt on taxes: "All studies suggest that for food in general, we’re not particularly responsive to price." Oklahoma State University economist Jayson Lusk, who also is president of the Agricultural and Applied Economics Association (AAEA), has blogged several times about soda taxes, agreeing with most of the Tamar Haspel column  in the Washington Post, and concluding stridently: "I'm sorry, but if my choice is between nothing and a policy that is paternalistic, regressive, will create economic distortions and deadweight loss, and is unlikely to have any significant effects on public health, I choose nothing" (emphasis added).

In the Salt this week, NPR reporter Dan Charles quotes Berkeley researcher Kristine Madsen on whether the new estimates of SSB reduction are large enough to matter for public health. "Madsen says a 20 percent reduction in consumption of sugar-sweetened beverages would be enough to reduce rates of obesity and Type 2 diabetes in years to come. 'This would have a huge public health impact if it were sustained,' she says." I think most experts in public health nutrition would agree with Madsen's assessment.

This week, Jayson's blog post on the Berkeley study raises some measurement issues, but recognizes that these issues are unlikely to overturn the main result. He writes, "All that said, I'm more than willing to accept the finding that the Berkeley city soda tax caused soda consumption to fall. The much more difficult question is: are Berkeley residents better off?" This is a question that surely will be discussed heavily in the next couple years as more municipalities experiment with such policies.

Is the Center for Consumer Freedom no longer working on soda?

The Center for Consumer Freedom (CCF) is a classic industry-funded front group, secretive about its funding sources and utterly mercenary in its writing.

I once enjoyed debating soda policy in New York City with J. Justin Wilson from CCF in Episode 1 of a series of roundtables organized by the Museum of Food and Drink.

The Center was on my mind recently, after watching the the excellent 2014 documentary Merchants of Doubt on Netflix. There is a related book by the same title.

The Center's once-lively website now seems moribund. Here is a chart of its number of Headlines posts in the past year. The remaining activity seems focused only on attacking animal welfare organizations, not on other old favorite topics such as defending soda.

The last mention of sugar sweetened beverages that I could find was almost a year ago, covering some trivial beverage industry victory in Howard County, Maryland.

From the topic coverage, we can guess who the CCF's current funders are. Perhaps, with increased scrutiny, other industries have been providing less funding to CCF. One imagines that this organization operates on a strictly "pay to play" basis. It is hard to picture CCF continuing to cover a topic based merely on principle.

Vanity beverage name: "Just Sugar Water"

Let's have a little fun with a major beverage manufacturer's website that allows you to order soda bottles with vanity names printed on them.

Update (11:42am): Twitter friends point out that ... of course ... others have already been experimenting with the limits of the words the website will accept. And here is CSPI's contribution.

A debate in NYC over soda policy

Heritage Radio Network has posted in full a debate Thursday night about the NYC soda policy proposals.

The debate had four participants:

• I spoke gently in favor of New York City's effort to experiment with moderate policies to change the environment in which sugar sweetened beverages are marketed and sold.  I suggested that the Board of Health's proposed limit on sweetened beverage container sizes was not as radical as it has been portrayed. My 2-minute opening statement begins at 17:25.
• Lisa Young, an author and adjunct professor at New York University, spoke strongly in favor of the proposal, using cups of various sizes as props to buttress her points.
• J. Justin Wilson trashed the proposal on libertarian and free-market grounds.  Wilson represents the Center for Consumer Freedom, an industry-funded organization that runs ads calling NYC Mayor Michael Bloomberg a nutrition nanny.
• Joel Berg directs the New York City Coalition Against Hunger.  He appealed strongly for broader policies to address U.S. poverty and expressed his organization's intention to neither endorse nor oppose the beverage size limitation proposal.  Then, Berg livened the debate by launching into an enjoyably vivid and highly critical analysis of such paternalistic policies.

The event was organized by the Museum of Food and Drink (MOFAD) and hosted by the New York City Food Policy Center at Hunter College.

Coca-Cola's "Cap the Tap" campaign

The MyPlate consumer education materials (.pdf) from the U.S. government wisely encourage folks to "drink water instead of sugary beverages."

The message from beverage companies is something else altogether.

Through its "Cap the Tap" campaign and related materials, Coca-Cola encourages restaurants to talk customers out of choosing tap water and instead to choose higher-profit items such as Coke, Minute Maid juice, Dasani bottled water, or an alcoholic drink. I read about this campaign recently in a hard-hitting post by Andy Bellatti at Civil Eats. A related link to Coca-Cola's CokeSolutions website appears to be broken now, but I found you can still read about the company's message for restaurants on Google Cache. [Note 11/18/2013: the basic link to CokeSolutions is working.  Bellatti points out by Twitter that the "Cap the Tap" graphic from that site is only available now in a Huffington Post screenshot.  Nice work.]

Bellatti also linked to this great, blunt, fascinating page by graphic designer Pen Williamson, with proposed posters that Coca-Cola could use to get restaurants to discourage healthy and inexpensive tap water as a beverage choice [Note: this sentence edited slightly Nov 15 afternoon]. The poster suggests, "provide tap water to guests upon request only."  I don't know if this poster or another similar poster was used in Coca-Cola's "Cap the Tap" campaign.

There is nothing the government can or should do to restrict this type of marketing to restaurants. Yet, I think it is terrible marketing from a nutrition standpoint, which gives us useful context as we interpret the public policy debate over the potential role of beverage companies as part of the solution to the nation's health and nutrition challenges.

Wine industry visualizations

The food industry visualizations of Michigan State University professor Phil Howard focus on relationships among businesses or sectors within the food system.

It is interesting how visualizations can carry different implicit messages even when they seem at first to address the same topic.

For example, the first of Howard's recent (December 2012) interactive visualizations of wine industry brands emphasizes the great diversity of options in the marketplace ...


... while the second of these visualizations emphasizes the comparatively heavy concentration at the corporate level.


For more about the food system more generally, see Howard's 2012 working paper with Harvey James Jr. and Mary Hendrickson. More to come on this topic of food system visualizations.

Colbert covers the VitaminWater lawsuit

In food advertising and labeling law, there is a concept called "puffery." It means advertising or labeling claims so outlandish that reasonable adults will recognize their falsehood.

You might think that health advocacy groups would use the word "puffery" as an insult when describing food company advertising. Not so.

Instead, it is the food companies who use the word "puffery" in legal briefs defending their own advertising. As in: "Sure, our advertising claim was false, but so what? Our claim was mere 'puffery.' We have no legal obligation to stand by its truth." I thought of this arcane field of puffery-related law while watching Colbert's coverage of the Coca-Cola VitaminWater lawsuit this week.

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Are Taubes and Couzens too hard on the Dietary Guidelines?

Gary Taubes and Cristin Kearns Couzens have a remarkable expose in Mother Jones of the sugar industry's misleading public information efforts over several decades.  The feature article stands out for its effective use of previously overlooked archival materials.  The indictment of sugar industry influence on policy advice and nutrition science research is devastating.

Everybody interested in U.S. food policy should read this story.

I do have one substantial complaint.  As in previous work by Taubes, this article does well in describing sugar industry public information campaigns, but it unfairly characterizes the recent editions of the Dietary Guidelines for Americans.

One of the best things about the 2010 Dietary Guidelines, for example, is that any reader can see the systematic evidence reviews -- published free on the internet -- that form the basis for the document's conclusions.

Here is what Taubes and Couzens say about the 2010 Dietary Guidelines:

The authors of the 2010 USDA dietary guidelines, for instance, cited two scientific reviews as evidence that sugary drinks don't make adults fat. The first was written by Sigrid Gibson, a nutrition consultant whose clients included the Sugar Bureau (England's version of the Sugar Association) and the World Sugar Research Organization (formerly the ISRF). The second review was authored by Carrie Ruxton, who served as research manager of the Sugar Bureau from 1995 to 2000.

But following the first link in the preceding paragraph, the federal government's evidence review says exactly the opposite of what Taubes and Couzens claim:

Conclusion.  A moderate body of epidemiologic evidence suggests that greater consumption of sugar-sweetened beverages is associated with increased body weight in adults.

Taubes and Couzens say USDA cited "two scientific reviews," but anybody following the link can see that USDA cited four reviews.  The review that USDA gives most weight was not mentioned by Taubes and Couzens, and it endorses the warnings against sugary drinks.

The whole advantage of systematic evidence reviews is to avoid cherry-picking evidence that favors one's own argument.  I think it would be great for science journalists to adopt the same practice of specifying a selection protocol in advance, just as the federal government's evidence reviews do, so that the journalists are not tempted to report only evidence that corroborates their thesis.

As this blog noted recently, the MyPlate guidance is accompanied by well-crafted terse advice about sugary drinks:

Drink water instead of sugary drinks.

Taubes and Couzens seem right on target in their criticism of the Sugar Association but quite unfair to the federal government and recent editions of the Dietary Guidelines.  (The authors' criticism of earlier editions may be more justified.)  Part of the reason I accept the main thrust of Taubes' critique of sugar-sweetened beverages is that -- despite his tone -- this particular aspect of Taubes' work seems fairly consistent with the sober judgement of mainstream dietary guidance in 2010.

Rudd report on soft drink taxes

The Rudd Center for Food Policy and Obesity has a very timely report on soft drink taxes (.pdf).

An engaging section at the end offers point-by-point contrasts between what "opponents" and "proponents" say about soft drink taxes. Here are some examples and my comments on them.

Opponents say:
Soft drink taxes are regressive. They will disproportionately hurt the poor and minorities who spend a larger proportion of their income on food.

Proponents say:
Soft drink taxes have the potential to be most beneficial to low-income people, who:
-- may currently consume more soft drinks;
-- may be more sensitive to higher prices and therefore stand to benefit most from reducing consumption.

This is especially true if the revenues are used for programs that
will benefit the poor, or for subsidies on healthier foods which can
offset concerns that the tax is regressive.

While everyone must eat, sugared beverages are not a necessary
part of the diet and generally deliver many calories with little or no
nutrition.

To make the proponents' point even more broadly, it is good public policy to expect the tax system as a whole to be progressive, but it would be bad policy to expect every disaggregated sales tax to be progressive.

Opponents say:
The government should stay out of private behavior. It should not try to regulate what people eat or drink.

Proponents say:
The government is already deeply involved in what we eat, from farm subsidies to setting nutritional standards for school meals. Historically, major government interventions have been successful in improving and protecting the public’s health. Examples include smoking restrictions and tobacco taxes, mandated seat belt usage, fluoridated water, and vaccinations.

It is true that government interventions can promote the public interest. However, on this question about personal food and beverage choices, I'd encourage the proponents to listen very carefully to the opponents' concern. The proponents should spend more ink calling for reforms to misdirected government policies (such as subsidies for inputs to corn sweeteners) than calling for taxes to change public behavior. Public policy to address obesity wins more public agreement when the public strongly senses a heartfelt deference to consumers' own preferences.

Here is a rhetorical argument that proponents can pursue in states where sales taxes are lower for groceries than for other goods: "Soft drinks should be taxed fairly, just like all other consumer goods subject to sales tax. Soft drinks should not be taxed using the special lower tax rate for food necessities. This policy reform does not tell consumers what to do. It merely puts soft drinks in the appropriate category of goods subject to sales tax." In such states, proponents should never get caught in a sound bite that makes them seem more eager to direct consumer choices.

Opponents say:
Soft drink taxes can’t be compared to cigarette and alcohol taxes. The use of tobacco and alcohol can have adverse consequences for non-users (for example, second hand smoke, and drunk driving accidents, called “negative externalities”). This is not true for soft drink consumption.

Proponents say:
Obesity also has negative externalities which affect us all. Among them are significant overall health care costs, including higher medical, disability, and insurance premium costs. For example, obesity-related medical expenditures were estimated in 2002 to be $92 billion, half of which were paid for with taxpayer dollars through Medicaid and Medicare.

The proponents, here, have chosen an argument that may be too broad to win public agreement. By the same argument about shared insurance risk pools, one could justify fairly severe government interventions to influence personal choices that affect health. Contrast this argument with the much stronger public appeal of policies to protect children from soft drink sales and marketing in schools.

At the end of the day, I'd support much stronger public policies to address soft drink consumption and obesity, but the proponents' arguments in this report could be strengthened with some pruning.

Olympic sponsorship does not always boost the brand

After Argentina's Olympic soccer team became the second to strike a racist pose in Beijing, the Consumerist blog pointed out the sponsorship. Of course, Coca-Cola couldn't have known in advance, and isn't to blame. Still, if a brand gains unmerited goodwill from association with a winning athlete, it may expect to take the damage from the losers.

Hershey's regular milk

Yesterday, Mark Frauenfelder at boingboing had a funny post about an incompetent fast food restaurant poster, with an incomprehensible offer of some sort of two-for-one deal at Checkers and Rally's. The related links section at the bottom referenced an earlier Frauenfelder post about Hershey's selling regular milk.

I was walking down Van Nuys boulevard with my daughter, enjoying the 103 degree weather over the weekend, when she demanded milk. We went into a Burger King and I ordered a milk. When the employee handed me this bottle,... I told her I didn't want chocolate milk. She said it wasn't chocolate milk. I had to look at the ingredients to make sure.

Three questions come to mind. 1) Why is Hershey's in the business of selling regular milk? 2) And why would it insist on making the label look chocolately? -- it would be like Lipton selling a bottle of water with pictures of tea leaves and a lemon on it. 3) And why Hershey's they make the label opaque so you can't tell at a glance if the milk is flavored or not?

I don't think the Hershey's label is an accident. Milk manufacturers are purposely blurring the distinction between flavored milks with added sugar and regular milks. They want your mental filing system to file flavored milk in the "healthy" folder instead of the "sugary drinks" folder. Voluntary industry guidelines for marketing beverages in schools are written specifically to permit sweetened flavored milk, so long as the sugar content meets a certain standard.