MILWAUKEE, Oct. 13, 2020 /PRNewswire-PRWeb/ -- People may interpret the passage of a tax as a signal that soda is less healthy than they previously thought. This "signaling" explanation would cause people to reduce soda consumption by more than would be expected by the price elasticity of demand. In contrast, people might display reactance – i.e., "fight back" and "double down" and consume more soda because they don't like "being told what to do." New research released, designed experiments to help disentangle these two effects.
In the new article "Non-Pecuniary Effects of Sugar-Sweetened Beverage Policies" released in the American Journal of Agricultural Economics, Jayson Lusk from Purdue University, and Sunjin Ahn from Mississippi State University try to figure out why sugary drink taxes increase or decrease the amount of consumption.
Lusk says, "First, our research shows the value of replication and the value of the peer-review process. In this time of 'replicability crises' in other disciplines, it is important to have journals and processes that allow for the communication of null result. Second, the real-world implications are that, in general, the price-effects of taxes are the main drivers of changes in soda consumption; the non-price effects were small on average."
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SOURCE Agricultural & Applied Economics Association