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Abstract
In this paper we applied a dynamic estimation procedure to inves-
tigate the role of obesity on the demand for soda. The dynamic model
accounts for storing behaviors, and allowed us to study price sensitiv-
ity as well as sale sensitivity of soda consumers. By matching store
level data to obesity data, we considered the effect of obesity rates
on soda demand. We found that higher obesity rates were associated
with a higher attitude to anticipate future needs and respond to sale
prices. Conversely, according to our results, a higher rate of obesity
was also associated to lower price sensitivity. We also considered how
some obesity predictors affected the demand for soda. Our results
contribute to the existing literature by raising important elements to
help establish correct policies to fight obesity. For instance, our re-
search suggests that a policy intervention restricting the magnitude of
sales would be more successful than a tax increase in modifying the
behavior of obese consumers.