Soda tax and soda price in Mexico
On November 9th, Jeffrey Grogger, the Irving Harris Professor in Urban Policy at the University of Chicago Harris School of Public Policy, presented his preliminary research on soda tax and soda price in Mexico as part of the Becker Brown Bag Series. Mexico’s nine percent soda tax took effect on January 1, 2014. In addition to taxing soda, fruit juices and waters with added sugars are also being taxed. The Mexico soda tax is a straightforward example of price theory. The tax raises the price and the higher price lowers consumption. The lower consumption then ideally leads to lower weight and less chronic disease.
Professor Grogger’s research strives to answer two key questions that aren’t addressed by the theory:
- How much do prices rise?
- What happens if consumers substitute other caloric drinks for sodas?
University of Chicago researchers also have access to Euromonitor data through Passport GMID. Euromonitor’s category briefing on sugar confectionery in Mexico discusses the effect of the tax. Consumption data is also available, although Professor Grogger noted in his presentation that consumption data varied greatly across different sources.