The (not quite) Science of Vice Taxes


Although it’s a fleeting desire, people do actually want to be healthy. When they’re motivated to maintain or improve their health, people will seek out information to do so and act accordingly. Unfortunately, the mind is a divided system of competing motivations, and “be healthy” is not one motivation to pick fights. This idea, that health is a losing motivation for many people, can explain why obesity is such a problem in a country with cheap, calorie-dense foods. The widely accepted proposal to address this is to trigger another seemingly more powerful motivator: money. The prevailing logic is that people will buy less unhealthy products if those products are more expensive. If we tax alcohol, tobacco, and sugar, people will buy less of these products and, hopefully, drink less, smoke less, and consume fewer calories.

When Mayor Bloomberg of New York City proposed taxes on large sugary drinks, it was exciting because it seemed like policy makers might finally be taking the advice of psychologists and behavioral economists. It’s common to think that medicine and engineering provide drugs, treatments, structures and technologies that realistically impact our lives, but that behavioral sciences aimlessly document how people think and behave in counter-intuitive ways. A beautifully engineered iPhone 5 might drive computing and communication into a new age, while a study priming men to be measurably more creative seems nothing more than an interesting read over coffee at the kitchen table. In fact, behavioral science research supplies necessary tools for addressing human problems (see Scott Atran’s argument here).

Despite the potential to inform public policy, behavioral science, like natural science, requires empirical evidence. Hunches gleaned from quasi-related research won’t cut it, and neither will lab experiments alone. Just like approving the safety of a plane requires more than good computer simulations, or a safe drug requires more than thorough animal trials, real confidence in policy aimed at changing public behavior requires randomized experiments, field studies, and large-scale observational research (see Dave Nussbaum’s piece here, and Richard Thaler here). I think that the proposal to tax soft drinks falls short of actual applied behavioral science. Though there is good theory to expect vice taxes to reliably decrease the behaviors at which they’re targeted, the empirical data just aren’t there (or the effects are small, see Fletcher, Frisvold, & Tefft, 2010).

A good example of randomized trials that could inform policy comes from research at Cornell. Brian Wansink and colleagues published their findings from a field study in the eastern United States. Over 6 months, they tracked the purchases of over 100 households, half of which received a 10% tax on low nutrient: calorie foods during the treatment period. They found that although the treatment group (compared to control) purchased significantly less taxed, unhealthy foods during the first month, these differences disappeared by three months, and purchases were unchanged by six months. Moreover, among those in the treatment group, households that reported to be regular beer and fruit juice purchasers actually increased their purchases of these products.

It is findings like these that, if communicated effectively, would shock a committee assembled to discuss vice taxes. The point is not to suggest that we avoid policy designed to nudge people into make better decisions. Rather, we should inform our decisions about such behavioral change, and who better to inform us than the experts on behavior themselves—economists, psychologists, sociologists and the like. Alas, my fear is that paying for social experiments to inform policy is not a high priority, much like “be healthy” is not a strong motivation.


Fletcher, J. M., Frisvold, D., & Tefft, N. (2010). Can soft drink taxes reduce population weight?. Contemporary Economic Policy28(1), 23-35.

Wansink, B., Hanks, A., Just, D., Cawley, J., Sobal, J., Wethington, E., & Schulze, W. (2012). From Coke to Coors: a field study of a sugar-sweetened beverage tax and its unintended consequences. Available at SSRN.


2 thoughts on “The (not quite) Science of Vice Taxes

  1. Hi Nick, this is a nice piece — I hadn’t seen the Wansink experiment, I’ll be sure to take a look.

    You make a very good point about the need to actually test whether interventions based in social science research work as expected. The Bloomberg soda ban is a good example of taking bits and pieces of research but not applying them in a thoughtful manner. If there were no 32 oz. soda cups research tells us that would reduce soda consumption, but if they already exist, then taking them away is very different than not having them at all. People hate having things taken away and often react by wanting the forbidden thing more, which has the opposite effect of what Bloomberg intended.

    If we’re going to have a government that is smarter instead of just bigger, then we have to systematically test what really works rather than just taking our best guess.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s