Did you know that in some cities there is a tax on soda? If you buy a soda in Albany (CA), Berkeley, Boulder, Oakland, Philadelphia, San Francisco, or Seattle then the government gets some of the money that you spend on it.
Why? Well taxes on sodas (and specifically sugary drinks) are in a group of what’s called “sin taxes” or taxes on things like cigarettes, alcohol, and sugary drinks.
That’s odd. Sugary drinks do not sound like they should be in the same category as cigarettes and alcohol.
Let’s get into it a little bit more. Researchers have shown that too much sugar is not good for you and can lead to health issues. Further, apparently people treat sugar in sodas different than sugary solid foods – they might eat less later in the day if they have a doughnut in the morning, but they don’t change their food habits if they have a sugary drink. So, it seems that sugary drinks are especially not good for you.
Further (and importantly for the reasoning of the tax), if sugary drinks are not good for your health, then I might have to pay for it! How does that work? Well people are on either public or private health insurance. If other people have health issues because of too much sugar consumption, then it could (at least in theory) raise the overall cost of insurance. The concern here is that other people are impacted by someone’s consumption of too much sugar. It economic terms, this is an externality.
Definition reminder. An externality occurs when a third party is affected by your consumption or production of something. For more on externalities, see this post on chocolate and chili or this post on gender reveal cakes.
Another reason is that either because people are uninformed or there are self-control issues, sometimes people consume more sugar than they would knowingly like to consume. In other words, there is a higher cost to themselves than they realize or are able to control. (See citation below for more on this.)
Ok, so that’s where taxes come in! In those seven cities I listed, there is a tax on sugary drinks. A tax increases the price of a good. With higher prices, fewer people will buy sodas. If people are drinking less soda, they may be healthier. If people are healthier, then it costs other people less money in terms of health care expenses. Taxes --> reduce consumption --> less health costs.
It all sounds good, but…
There is some backlash to this. Why? First, who likes to pay higher prices? Second, lower income people are more likely to buy soda than higher income people. So, the government is then taxing lower income people more than higher income people (what is called a regressive tax).
The response to this argument is that if health benefits that lower income people receive from less sugar consumption of soda outweighs the tax costs, then it is a net win. I’ll let you decide what you think about this. Also, see if you can think of other pros and cons!
How does this relate to cigarettes and alcohol? Well cigarette smoke also affects other people (second-hand smoke and health costs). And when people get drunk, sometimes they do things like drunk driving which hurt other people. So, just like sugar, other people are affected. Thus they are lumped in with “sin taxes.”
Berkeley, CA was the first city to pass a soda tax in 2014. But, they aren’t stopping there. Now, they have a new plan:
Rather than adding taxes on other “unhealthy” things, they are banning them from the register area of large grocery stores. You know, where they usually have the candy, potato chips, gum, and sometimes soda. That will no longer be allowed. Instead they will be required to have “healthy” items at the check-out counter.
Their idea (I believe) is to reduce the impulse purchases people make as they are finishing their shopping, and/or reduce the probability you child begs you to buy some candy as you are checking out. (Detailed CNN article on this.)
I can tell you the candy, potato chip, and soda companies will NOT be happy with this change, as they often pay to have their things at the front.
Whether it’s taxes on soda or moving the position of candy, the idea is to reduce consumption of sugar.
Source: There is a great economics paper in the Journal of Economic Perspectives by Hunt Allcott, Benjamin B. Lockwood, and Dmitry Taubinsky called "Should We Tax Sugar-Sweetened Beverages? An Overview of Theory and Evidence." Check it out! Any mistakes in this blog post are my own. They are much more detailed and clear in their paper.
Potato chip cookies
Now that we are done talking about policies in place to limit sugar and potato chip consumption, let me give you the recipe for some delicious potato chip cookies! These are an absolutely amazing treat. I was only able to bring myself to make half a batch (it makes about 14 cookies) given the amount of butter in the recipe.
These cookies are buttery, crunchy, crumbly, and delicious. Enjoy!
Half Batch Potato Chip Cookies
Source: No idea, it was in my mom's recipe binder
(approx. 14 cookies)
1 cup (2 sticks) of butter, softened.
¾ cup (150 grams) sugar
½ tsp. vanilla
1 ½ cups (188 grams) flour
¾ cup crunched up potato chips
1 cup ground pecans, optional
Preheat oven to 325 degrees. Cream butter, sugar, and vanilla using a mixer. Add rest of the ingredients except pecans and gently mix until incorporated. Spoon cookies on baking sheet then roll them in pecans (if using). Bake for 13-15 minutes.
I put the cookie dough in the refrigerator for the night after I rolled the cookies, so they took a little longer to bake.
Once they are out of the oven and cooled, dust with powdered sugar.