Abstract

BACKGROUND: Grocery food taxes represent a stable tax revenue stream for state and municipal government during times of adverse economic shocks such as that observed under the coronavirus disease 2019 (COVID-19) pandemic. Previous research, however, suggests a possible mechanism through which grocery taxes may adversely affect health. Our objectives are to document the spatial and temporal variation in grocery taxes and to empirically examine the statistical relationship between county-level grocery taxes and obesity and diabetes.

METHODS: We collect and assemble a novel national dataset of annual county and state-level grocery taxes from 2009 through 2016. We link this data to three-year, county-level estimates based on data from the Centers for Disease Control and Prevention on rates of obesity and diabetes and provide a nation-wide spatial characterization of grocery taxes and these two health outcomes. Using a county-level fixed effects estimator, we estimate the effect of grocery taxes on obesity and diabetes rates, also controlling for a subset of potential confounders that vary over time.

RESULTS: We find a 1 percentage point increase in grocery taxes is associated with 0.588 and 0.215 percentage point increases in the county-level obesity and diabetes rates.

CONCLUSION: Counties with grocery taxes have increased prevalence of obesity and diabetes. We estimate the economic burden of increased obesity and diabetes rates resulting from grocery taxes to be $5.9 billion. Based on this estimate, the benefit-cost ratio of removing grocery taxes across the United States only considering the effects on obesity and diabetes rates is 1.90.

Document Type

Article

Publication Date

2-13-2021

Notes/Citation Information

Published in Health Economics Review, v. 11, issue 1, article no. 5.

© The Author(s) 2021

This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit https://creativecommons.org/licenses/by/4.0/. The Creative Commons Public Domain Dedication waiver (https://creativecommons.org/publicdomain/zero/1.0/) applies to the data made available in this article, unless otherwise stated in a credit line to the data.

Digital Object Identifier (DOI)

https://doi.org/10.1186/s13561-021-00306-2

Funding Information 

This work was funded by the U.S. Department of Agriculture (USDA) Economic Research Service through a cooperative agreement under federal grant number 58–4000–8-0020.

Related Content

The obesity and diabetes datasets generated during and/or analyzed during the current study are available in the CDC WONDER system. The scanner data that support the findings of this study are available from the Nielsen company but restrictions apply to the availability of these data, which were used under license for the current study, and so are not publicly available. The tax datasets used during the current study are available from the corresponding author on reasonable request.

13561_2021_306_MOESM1_ESM.docx (23 kB)
Additional file 1. A1. Full Regression Results Health Outcomes on Grocery and Restaurant Sales Taxes. A2. Calculation of Health Burden and Benefit-Cost Ratio.

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