A study examining the effects of targeted snack food taxes on purchase decisions found warning labels can strongly impact consumer behavior with high-fat snacks that carry a "sin" tax. Although the results were mixed, with consumer groups responding to consumer behavior modification tools differently, researchers note that the findings support existing literature suggesting taxes alone are not an effective way to decrease consumption of less healthy snacks.
The study was conducted using computer-assisted intercept surveys in Canadian supermarkets, where consumers were asked to chose between high-fat snacks, some displaying a warning label, and healthier snacks. Researchers note there clearly was heterogeneity of consumer response: One group heeded warning labels, another avoided less healthy snacks and became more sensitive to price when a warning label was present, and a third class was sensitive to price but not warning labels.
In their arguments against the efficacy of taxes alone, researchers note that small price increases only have small impacts on consumption and larger price increases may be politically infeasible and would have larger distributional effects. Additionally, the authors remarked that lower-income families who already spend much of their income on food might end up paying most of the tax.
Instead, they argue a warning label that points out that the less healthy food is taxed and why may be more effective. Researchers do warn that the very different responses of the three consumer segments suggest that public health benefits will be unevenly distributed throughout the country's population.
The study's findings were published in the Spring edition of the The Journal of Consumer Affairs. The full article---"Heterogeneous Consumer Responses to Snack Food Taxes and Warning Labels" --can be viewed online at the Wiley-Blackwell website.