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The Impact of Taxation and Signposting on Diet: An Online Field Study with Breakfast Cereals and Soft Drinks

Lookup NU author(s): Professor Daniel ZizzoORCiD, Dr Melanie Parravano Baro



This is the authors' accepted manuscript of a working paper that has been published in its final definitive form by University of York, 2016.

For re-use rights please refer to the publisher's terms and conditions.


Background: Current thinking about the impact of a fiscal policy intervention, such as a ‘sugar tax’, on dietary behavior is limited and based on econometric and modelling data, or on experimental studies using hypothetical purchase choices. This study presents a large scale field study: a nationally representative sample of participants was asked to make real purchases within an online supermarket platform. The study captured price elasticity for two products of policy interest: breakfast cereals and soft drinks, as well as the impact of how those changes are signposted to the consumer.Methods: 1,000 participants, with latent demand for breakfast cereals and soft drinks, were randomly allocated to one of two conditions (signposted or not signposted) and completed ten shopping tasks using an online supermarket platform. They were given a budget of £10 and were aware that a randomly determined task would be played out for real: they received the groceries chosen and any unspent budget. For each of the 10 tasks, the supermarket contained either breakfast cereals (five tasks) or soft drinks (five tasks), and the pricing either matched a UK grocery retailer (baseline), or a subset of products received a tax of either 20% or 40% to either the healthier or less healthy items within the supermarket. Participants could fill a one week shopping diary after groceries were delivered.Results: When the taxes were signposted to consumers, both the 20% and 40% rates reduced purchase volume of all the products they were applied to. When the taxes were not signposted, reductions in purchase volume were only seen in less healthy breakfast cereals and healthier soft drinks at 20% taxation, and in less healthy breakfast cereals and all soft drinks at 40% taxation. There were no significant differences in the effects from taxation between socioeconomic groups.Discussion: Fiscal policies that tax food or drinks may be an effective means of altering food purchasing, with a 20% rate being sufficient to make a significant impact in relation to breakfast cereals and soft drinks. Signposting represents a complementary ‘nudge’ policy that could enhance the impact of the tax without imposing severe welfare loss, though the effectiveness may depend on the product category. Expectations that taxation would reduce socioeconomic inequalities in diet may be overstated, but neither is there reason for concern that overall diet improvement would have to come at the cost of increasing socioeconomic inequalities.

Publication metadata

Author(s): Zizzo DJ, Parravano M, Nakamura R, Forwood S, Suhrcke M

Publication type: Working Paper

Publication status: Published

Journal: CHE Research Papers

Type of Article: Working Paper

Year: 2016

Pages: 47

Publisher: University of York