Did the junk food tax make the Hungarians eat healthier?
Introduction
The junk food tax of Hungary which was introduced in 2011 is a unique approach to improve population health. The policy is unique in terms of the range of food covered by the tax, the rate of the tax, and the explicit aim of health improvement.
My aim in this paper is to estimate the effect of the Hungarian junk food tax on food consumption. I am interested in the overall effects and the effects by socioeconomic status. I take a broad approach in the sense that I do not focus on the consumption of particular items on which the tax was levied, but analyse broad consumption categories. I focus on how the consumption of processed and unprocessed food changed after the introduction of the junk food tax. Dietary guidelines1 generally recommend the consumption of more fresh food and less unprocessed food, so as to reduce the consumption of sodium, solid fats, added sugars. The consumption of unprocessed food is generally known to reduce the risk of cancer and heart diseases.2 Focusing on broad categories of food can reveal if the junk food tax lead to substantial changes in dietary patterns. If the taxed items are substituted with untaxed, but also unhealthy products then the tax does not achieve its final aim.
The analysis contributes to the knowledge of how governments could tackle obesity and diet related diseases of the population. The results of the paper suggest that taxing specific categories of unhealthy food can lead to some improvements in the dietary habits of the population, especially among the lower income groups. This is based on statistically robust albeit quantitatively moderate evidence for decreasing consumption of processed food after the junk food tax in Hungary was introduced. In the long run these dietary improvements are likely to lead to positive health effects.
Section snippets
Related literature
There are only few studies that assess based on natural experiments the efficiency of taxing a selected range of unhealthy food. This scarcity of the literature is mainly due to the fact that only few countries have introduced unhealthy food taxes. The taxation of sugar sweetened soft drinks is more widespread, among others, Finland, France, Norway, and several states of the US have introduced such taxes. According to Sturm et al. (2010), the existing small tax rates on sugar-sweetened
Policy
After its legislation in July 2011, the junk food tax was introduced in September 2011. The tax is often called “chips tax” in the Hungarian media, the official naming is “Public Health Product Tax”. The tax applies to certain categories of pre-packed food which are high in salt, sugar or caffeine. The official aim of the Hungarian Government was to improve the health of the population, and the income from the tax would be used for health improving policies (including wage increases of health
Data
I use data from the Hungarian Household Budget and Living Conditions Survey. The representative survey is administered by the Hungarian Central Statistical Office, it has been running in its current form since 2009, the data I use correspond to years 2008–2012. The annual sample covers around 10 thousand households, 26 thousand individuals. This gives overall 44,608 household level observations throughout the 5 survey waves. The survey is a 4-years rotational panel: each household remains in
Estimation strategy
I compare the effect of the tax on “healthy” and “unhealthy” food categories. The selected food categories are detailed in Table 3. I call “healthy” food those items on which the junk food tax is not levied, and “unhealthy” food those that can be taxed. The “unhealthy” group is the broadest in the baseline specification (specification 1). Here I consider all processed food as “unhealthy” and unprocessed food as “healthy”. The taxable products are all processed food. The final aim of the tax is
Results
In the baseline specification I estimate fixed effects models of the standardised measures of processed and unprocessed food consumption, including as regressors the binary tax indicator, a linear trend and household characteristics. The estimated coefficients of the taxation dummy are presented in the first part of Table 4.9
Although the expenditures on processed food went up by 6.5% after the introduction of the junk food tax,
Conclusions
I found some evidence that the junk food tax improved the dietary habits of the population in Hungary. After the introduction of the tax, the consumed quantities of processed food decreased significantly by 3.4%, while the consumed quantities of unprocessed food increased insignificantly by 1.1%. The results are qualitatively robust to specification checks. Throughout the paper I considered a shift towards the consumption of unprocessed food as a dietary improvement. The estimated changes
Acknowledgements
This project was funded by the Scottish Institute for Research in Economics (SIRE) Early Career Engagement Grant. The Hungarian Central Statistical Office provided access to the data. The views expressed in this paper are the author’s own and do not in any way represent the views of the Hungarian Central Statistical Office. I am grateful for comments received from Michele Belot (The University of Edinburgh), József Bonifácz Solymosi and József Vitrai (OEFI, Hungary), and from two anonymous
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