APPLIED ECONOMICS AND POLICY


Do Taxes on Groceries Increase Body Weight and Restaurant Food Expenditures? Teory and


Evidence from the PSID Data Food Policy, 118, July 2023 LINK TO PAPER


HARRY KAISER GELLERT FAMILY PROFESSOR


OF APPLIED ECONOMICS AND MANAGEMENT Charles H. Dyson School


of Applied Economics and Management Cornell SC Johnson College of Business Cornell University


Co-authors • Harry M. Kaiser Gellert Family Professor of Applied Economics and


Management, Charles H. Dyson School of Applied Economics and Management, Cornell SC Johnson College of Business, Cornell University


• Lingxiao Wang, University of Wisconsin - Madison • Yuqing Zheng, University of Kentucky


Summary Grocery sales taxes exist in about one third of U.S. counties, in various state/


county/city combinations, and these taxes change the relative after-tax price of grocery foods and restaurant foods. Te causal impacts of these taxes, espe- cially on health outcomes such as obesity, have been overlooked in policy de- bates and remain little known in the literature. Tis is the focus of the research reported here. Kaiser et al. examine the impacts of grocery food sales taxes on body weight, grocery food expenditures, and restaurant food expenditures from both a theoretical and empirical perspective.


Teoretically, grocery taxes affect food expenditure allocations by changing the prices of grocery foods relative to restaurant foods, consequently influenc- ing body weight because restaurant foods are generally higher in calories and less healthy. Te authors test this theory empirically using six waves of Panel Study Income Dynamics (PSID) panel data conducted from 2007 through 2017. Tey find that increases in grocery taxes relative to restaurant taxes incentivize low-income households to substitute fast restaurant foods in place of grocery foods, which are more easily accessible and affordable, but contrib- ute to obesity, diabetes, and other chronic cardiovascular diseases.


TO IMPACT CONTENTS


RESEARCH WITH IMPACT: CORNELL SC JOHNSON COLLEGE OF BUSINESS • 2023 EDITION


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