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Abstract
Early evidence from household-level surveys suggests that the one-cent-per-ounce tax on sugarsweetened
beverages which took effect March 1, 2015 in Berkeley, California decreased
consumption of sugar-sweetened-beverages by 21%2. Even if these findings are robust, the
welfare implications of expanding the Berkeley soda tax policy at a national level are
complicated by selection effects inherent in the populations of both voters and consumers. Based
on their demographic composition, the soda preferences of voters who supported the Berkeley
referendum likely differ from the preferences of high-soda-consuming households, and from the
preferences of the average-soda consuming household in the United States. Further, we find
consumption responses related to the tax interact nontrivially with consumer heterogeneity.
Some of these responses directly counter the public policy goals of a soda tax: first, highconsuming
households are less price sensitive, and therefore less responsive to price changes
following a tax; and, second, “reactance” among high-consuming populations led to increases in
soda consumption immediately following the passage of the tax, partially mitigating reductions
in soda consumption.