An experimental investigation of the impact of fat taxes: Price effects, food stigma, and information effects on economic instruments to improve dietary health

Abstract

This thesis investigates how a tax and warning label on less healthy snack food products may affect consumer behaviour when the imposition of the tax is a source of consumer information. A survey that included choice experiments was implemented in supermarkets. Participants were asked to choose between high fat snacks, some displaying a stigmatizing warning label, and healthier snacks. Multinomial logit and latent class models exploring choice were estimated and a predictive hypothetical market was set up. Results show that the warning label had a negative price premium of about $4. The effect of price, though small, becomes even smaller as BMI increases. A fat tax for health is not recommended because it might not hit the target population, people were not very price sensitive, and it would likely be regressive. To encourage health, it appears to be more effective to display a warning label than to apply a tax.