Sweet beverages like soda and energy drinks are terrible for our health. Consuming all of this diluted sugar is strongly correlated with a myriad of health risks, including obesity, diabetes, heart disease, gout, and even early death. But soda is cheap and delicious; it can even be less expensive than bottled tap water! Put bluntly: Soda is irresistible by design, so of course we continue to drink it.
But according to new research led by Lisa Powell, professor at the University of Illinois at Chicago, it takes very little to make a measurable impact on how many sweets people choose to drink—a mere cent per ounce, in fact.
In a paper published in the Annals of Internal Medicine, Powell’s team analyzed the effectiveness of a sweet-drink sales tax that ran in the Chicagoland area for four months in 2017. The highly controversial program, called out by some for taxing the poor, added a one-cent tax on every ounce of drinks that used sugar and artificial sweeteners, ranging from Coca-Cola to Monster. The study didn’t weigh the morality of the tax, a topic of heated debate. It just explored, objectively, whether or not it actually prompted the desired behavioral change.
Citizens of Cook County, where the tax launched, already paid some of the highest sales and property taxes in the country. Fed up with yet another tax, they entreated politicians to repeal the law. But what Powell found was that, in terms of public health, the tax was remarkably effective at getting consumers to buy less soda.
With help from Nielsen, the team gathered data from 90% of grocery, convenience, and mass merchandise stores across Cook County—actually analyzing the UPC-scan data from clerks swiping purchases across the checkout laser. And what they found was the small tax dropped soda purchases by 27%.
“Prices went up and consumption started to fall,” says Powell, suggesting that this is the sort of result you expect from established economic theory. But the team also looked at data from stores in a 2-mile buffer around Cook County, the sorts of places you might drive to in order to stock up on soda without the tax. Indeed, researchers found a spike in soda buying in those areas. But even accommodating for the cross-borders bootlegging, soda consumption in Cook County still dropped by 21% from the tax.
Of course people will buy less of something when it costs more, but why was this small tax so effective? Powell points out that soda is so cheap that the tax, while low in absolute cost, is proportionately large in relative cost. A 2-liter bottle of soda is actually 67 ounces, meaning that 99-cent splurge would bump the drink to $1.66. The more soda someone buys, the more this effect compounds. On average, the tax bumped prices by 34%, but on large drinks, that number was more like 52%. (Meanwhile, on already pricey energy drinks, the tax was a relatively small hike—only 10% or so.)
The research suggests that taxing soda convinces some people to consume less of it—but what other design interventions could be implemented, other than a price hike? Powell points to tobacco legislation as a good example. She believes limiting access where people can consume soda, as it’s currently limited from sale in many public schools, can make a difference—just as the clean air laws banning smoking at workplaces and restaurants can make a difference. “You go to an ER, what’s in the waiting room? A soda machine!” Powell says. “When you’re in the waiting room for your ill ones, you’re getting yourself ill.”
Powell believes that Michael Bloomberg’s oft-roasted large fountain drink ban in New York City from 2013 (overruled by courts in 2014) was actually a good idea. It’s another way of limiting access. She also points out that legislation limiting sweet-drink marketing may be in the future too.
On paper, all of that sounds great: Intervene in every way possible so that people drink less sugar and live longer! But some have criticized the soda tax as disproportionately targeting low-income individuals, given that people with less income tend to drink more soda than the rest of the population. Who are legislators to take a hard-earned Fanta out of someone’s hands? Powell points out that the study didn’t take socioeconomics into account, but agrees that it probably did affect people with lower incomes more than other groups.
However, there’s another twist in the data, which suggests that maybe tax targeting could save people money. While tracking soda, the researchers also tracked the sale of milk and 100% fruit juices. They were curious if consumption of these other drinks spiked as a result of people forgoing their soda. And what they found was . . . nothing. There was no spike. People didn’t give up soda to just spend the money somewhere else.
“Perhaps they were actually saving money and just drinking tap water,” says Powell. And as she suggests, if money from a soda tax were reinvested into infrastructure to promise safe drinking water for everyone, then maybe a widespread soda tax really would be the best thing for everyone—whether we like it or not.