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.
Digital Object Identifier (DOI)
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.
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.
Wang, Lingxiao; Zheng, Yuqing; Buck, Steven; Dong, Diansheng; and Kaiser, Harry M., "Grocery Food Taxes and U.S. County Obesity and Diabetes Rates" (2021). Agricultural Economics Faculty Publications. 22.