Fellowship: Rocca Pre-Dissertation
Fellowship Year: 2025
Project Theme/Title: Heterogeneous Welfare Effects of Corrective Taxes: Evidence from South Africa's Soda Tax
Abstract: The key aim of this project is to provide the first systematic evidence on the impacts of a sugar tax in a developing economy with a high obesity burden and thus to strengthen the hand of policymakers to resist lobbying and make informed policy choices in one of the most pressing public health concerns of the coming years. We plan to estimate how the tax impacts the consumption and production of sugary drinks; how these effects vary by age, gender, race, socioeconomic status, and health profile of consumers; and whether the tax leads people to shift their sugar consumption into untaxed sugary products. We are also in a unique position to analyze if the tax differentially impacts the poor compared to the rich. This is a crucial element in the policy debate because sugar taxes are perceived to impose higher costs on lower-income people. Leveraging our collaborative relationship with the South Africa Revenue Service, National Treasury, and other government departments, we will examine the effects of sugar taxes on both health and economic outcomes across all stakeholders. Examining these outcomes, we would be able to evaluate the effectiveness of a sugar tax in reducing obesity and overweight among various groups, including children, as well as its economic impacts on consumers, firms, and the government.
