It Wasn't Just the Soda Tax That Dropped Berkeley Soda Sales by 52 Percent

Soda taxes work, but they may not be enough on their own. 

Soda tax

The case against Big Soda is building. In late March, a policy statement condemned sugar-sweetened drinks as a “grave threat,” and scientific studies demonstrating a heart disease and cancer risk have recently been published. A future where soda is regulated like cigarettes is on the horizon, but one big question remains: What will it take to make people stop drinking the stuff? New research released Wednesday in Economic Inquiry dives into the first great soda tax success story to find out.

In 2014, the city of Berkeley, California implemented its answer to the soda problem: a soda tax, which levied a charge on sugar-sweetened beverages. There’s good evidence that the soda tax worked: a study published this year in the American Journal of Public Health found a 52 percent decrease in sugar-sweetened beverage consumption after the tax was passed. But was it the price hike alone that drove people away? The new study shows that in Berkeley, it took taxes and social changes to make the people change their ways.

University of California, Berkeley professor Sofia Villas-Boas, Ph.D., and Ph.D. candidate Scott Kaplan show in the new paper that soda purchases fell between 10 and 20 percent on Berkeley’s campus directly after the soda tax was passed but before the prices officially increased in 2015. They also used Nielsen data to show a similar pattern: soda purchases at local stores decreased by 10.8 percent even before the higher prices went into effect.

“The election outcome caused a 10-20% reduction in sales of regular soda beverages before consumers faced higher prices anywhere, on campus or in stores off-campus,” Kaplan tells Inverse, “This suggests that you might not witness these types of effects if a sugar-sweetened beverage (or soda) tax was implemented without a preceding campaign and public vote.”

soda
Berkeley's soda consumption dropped before the soda tax was implemented, and it continued to drop more aggressively after prices rose 

This analysis also showed that soda drinking on the Berkeley campus continued to decrease after the tax was implemented. After the city passed the soda tax, sales on campus decreased even more sharply, even though the university hadn’t yet raised prices yet. Soda sales decreased at UC Berkeley by 18 percent in March 2015 and grew to a 36 percent decrease in July 2016, remaining at those low levels afterward.

This patten suggests that soda taxes do play a role in curbing this habit, but not only because they raise prices: It’s because they also change attitudes about drinking soda.

The Effect of the 2014 Vote on Soda Drinking Habits

The introduction of Berkeley’s soda tax in 2014 came after a long movement called “Berkeley vs. Big Soda” — an informational campaign aimed at convincing residents to vote in favor of the soda tax. These authors found no change in consumption habits on Berkeley’s campus during the campaign, but immediately after the local vote, soda sales plummeted.

The question, which Kaplan and Villas-Boas raise in their paper, is: How did that campaign and ensuing election change people’s minds? They use several models of human behavior to explain their results.

One way of looking at it is to acknowledge that the Berkeley vs. Big Soda campaign simply alerted people to the risks of soda, which caused them to modify their behavior. Especially when put bluntly — like in New York City’s PSA drawing a parallel to drinking soda to drinking a glass of fat — learning more about soda’s health effects may make the drink harder to stomach.

Alerting people to the health effects of soda can help curb behavior, but price, and social norms also play a role. 

Another way of explaining it is the “rational addiction” model. While people may have enjoyed drinking soda before, the impending price hikes made them think twice about it. After it became clear that the prices were about to go up post-election, they may have cut back preemptively, Kaplan explains.

Finally, there could be changing social norms behind the drop in soda use, especially for the soda drinkers on Berkeley’s campus. In this model, it’s the election itself that holds the decision-changing power. The simple fact that the soda taxes was passed may have revealed the community’s negative view of sugar-sweetened drinks, which may dissuade members people from going against the grain.

“We can’t pinpoint one of these mechanisms directly without a more experimental setting, but I will say that other studies looking at university settings (alcohol consumption, for example) have found social norms to be extremely important,” Kaplan says.

The power of information to change social norms in relation to substance use is potent. Anti-smoking campaigns have led to declines in teen smoking — but it has been replaced by e-cigarettes, which is still seen as cool. In response, the FDA has launched a teen-focused campaign that attempts to convince them otherwise by changing the social norms around vaping.

Similarly, we may begin to see the same thing with soda. In a joint-policy statement released in late March, the American Heart Association and the American Academy of Pediatrics both pushed to change the social acceptability of soda-drinking and argued for a national level soda tax. Villas-Boas and Kaplan’s findings in Berkeley may add fuel to their fire.

Whether or not soda taxes are levied, it’s time to start seeing soda differently. In Berkeley, the tide is already beginning to turn.

Abstract: We examine how soda sales changed due to the campaign attention and election outcome of a local excise tax on sugar-sweetened beverages. Using panel data of beverage sales from university retailers in Berkeley, California, we estimate that soda purchases relative to control beverages significantly dropped immediately after the election, months before the tax was implemented in the city of Berkeley or on campus. Supplemental scanner data from off-campus retailers reveal this result is not unique to the university setting. Our findings suggest soda tax media coverage and election outcomes can have larger effects on purchasing behavior than the tax itself.