An Economic Analysis of the Effectiveness of Food and Beverage Taxes as a Deterrent of the Obesity Epidemic in the United States

Abstract

The obesity epidemic in the United States has become a large problem over the last thirty years. Because the full cost of obesity is not felt by the obese consumer but is passed on to the entire population through health insurance and government funded programs, government intervention has become necessary. Several politicians have proposed instituting taxes on sugary beverages and junk foods as a means of changing consumer behavior and reducing obesity rates in the United States. Although such legislation could be difficult to pass due to the complex nature of obesity and the strong presence of food and beverage lobbyists in Congress, a well defined policy would be an effective tool in combating the obesity epidemic. Based on the findings of several cases studies, the tax on sugary beverages and junk foods would have to be large. Small taxes are effective in generating revenue but only large taxes, over time, would influence consumer behavior and reduce individuals' body weight. In addition, access to affordable fruits and vegetables is a significant determinant in an individual's Body Mass Index. However, subsidizing healthy foods can have the negative consequence of individuals purchasing more unhealthy food. Using this information, policymakers can create an effective legislation to change consumer behavior and reduce obesity rates in the United States.