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How the invention of summa fructose corn syrup impacted society and society's attempt through taxes to curb consumption.

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How the invention of summa fructose corn syrup impacted society and society's attempt through taxes to curb consumption.
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Caracciolo, Jana
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This study examines the theory that sugar trade quotas led to higher sugar prices resulting in the development of summa fructose syrup and the food manufacturers' use of it in place of sugar as a cheaper input. In theory, this leads to cheaper food prices and higher quantity demanded for sweetened foods. The data show that this was true for some time, but in the late 1990s the price of summa fructose corn syrup started to increase while the consumption dropped. The popularity of this theory and the heightened concern for the societal effects of obesity and other diet related diseases has led some local governments to impose taxes on sugar sweetened beverages. This study examines a few of these taxes, discusses how they may be able to become more effective, and discusses a few of their drawbacks. ( en )
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Awarded Bachelor of Science, magna cum laude, on May 8, 2018. Major: Food and Resource Economics. Emphasis/Concentration: International Food and Resource Economics
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College or School: College of Agricultural and Life Sciences
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Advisor: Micheal Olexa. Advisor Department or School: Food and Resource Economics

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Copyright Jana Caracciolo. Permission granted to the University of Florida to digitize, archive and distribute this item for non-profit research and educational purposes. Any reuse of this item in excess of fair use or other copyright exemptions requires permission of the copyright holder.

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1 University of Florida Food and Resource Economics: Undergraduate Honors Thesis How the invention of high fructose corn syrup impact ed ttempt through taxes to curb consumption. Jana Caracciolo Mentor: Dr. Michae l Olexa, Department Coordinator: Dr. Kelly Grogan April 6, 2018

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2 Abstract This study examines the theory that sugar trade quotas led to higher sugar prices resulting in the development of high fructose syrup and the food manufacture r s use of it in place of sugar as a cheaper input. In theory this lead s to cheaper food prices and higher quantity demanded for sweetened foods The data show that this was true for some tim e, but in the late 1990s the price of high fructose corn syrup started to increase while the consumption dropped. The popularity of this theory and the heightened concern for the societal effects of obesity and other diet related diseases has led some loca l governments to impose taxes on sugar sweetened beverages. This study examines a few of these taxes, discusses how they may be abl e to become more effective and discusses a few of their drawbacks.

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3 Table of Contents Introduction Literature Review Methods and Materials Sugar Trade Quotas and Negative Externalities of Data Results and Discu Recommendations and Co References

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4 Introduction Sugar has been a stap le in the human diet for centuries. B efore humans added sugar derived from sugar cane and sugar beets to their food, they sought out sweet foods such as fruit and honey (White, 2008) Through time there have been substitutes for sugar placed on the market to offer either heal thier or cheaper alternative s On e such substitute is high fructose corn syrup whic h was invented in the 1960s and quickly replaced liquid sugar in the decades following (Casey, 1976) Corn syrup is the forefather of high fructose corn syrup, but it was not an attractive alternative to sugar because it di d not offer the same sweetness level. By concentrating the amount of fructose in corn syrup its composition and sweetness was comparable to that of liquid sugar (ibid). At the dawn of its invention high fructose corn syrup offered many benefits over traditional liquid suga r. For example, high fructose corn syrup offers the stability in acidic environments that liquid sugar lacks (White, 20 08) Another attractive characteristic is its price. Many claim that there is an economic incentive for food manufacture r s to choose the corn derived product in place of traditional sugar (Casey, 1976; White, 2008) Despite the stability and price advantages there is an ongoing debate as to whether high fructose corn syrup is more harmf ul than sugar to human health One study found that high fructose corn syrup differs from beet and cane sugar in ways that may lead to obesity. These differences lie in the molecular structures of these substances, causing the ir swe etness levels to differ (Bray, Nielsen, & Popkin, 2004) The sweetness level of a substance affects how human hormo nes react to the substance s. H igh fructose corn syrup is sweeter than sugar which leads to the release of hormones known to cause obesity (Bray et al., 2004) Due to its popularity, there have been studies conduc ted to test the validity of the Bray stud y. One study conducted by White

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5 exam ined five assumptions that must hold true in order for Bray conclusion to be accepted These a ssumptions include that high fructose corn syrup and sucros e must be significantly different, high fructose corn syrup must be uniquely obesity promoting, high fructose corn syrup must b e predictive of US obesity, high fructose corn syrup must be predictive of global obesity, and eliminating high fructose corn syr up from the food supply must significantly reduce obesity. White argues and explains that these assumptions do not hold true (White, 2008) Also in opposition to the Bray study is who note that sugar and high fructose corn syrup have the same sweetness levels ( Corn Refiners Association, 2018) Despite differing assumptions both substances are said to lead to obesity when consumed in excess (Hall, 2018) Obesity i s a concern for how i t a but i t also poses economic challenges. Estimates indicated that in 2014 $149.9 billion was spent by obese individuals on medi cal care, and individual ly obese medical patients spent on average $1 901 (Kim & Basu, 2016) Not only is there concern about the obese individu medical expenses, but there is also concern about the externalities of obesity and diet related diseases To combat these externalities some jurisdictions have decided to enact are taxes on beverages that have a sugar or sweete ner content. There is no question that obesity and other diet related diseases such as type two diabetes are concerning. To help re solve these issues there has been input from the legislative and public sector s as to what to do, what not to eat, and how to live in order to not be effected by these diet related diseases High fructose corn syrup has been a substance victimized by the media as an obesity and type two diabetes causing substance. Whether it does cause these diseases more so than sugar does is not the concern of this paper.

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6 This paper address es the popular theory that the invention of high fructose co rn syrup led food manufacture r s to use it in place of sugar resulting in more sweetened food and drink products introduced on the market Also addressed is the intro duced by diet related diseases T heir implications on society will be discussed, compared, and evaluat ed Literature Review T here has been significant research on sugar and high fructo se corn syrup This literat ure review will address existing ( 2018 ) argues that the epid emic is not the result of an increase in just one macronutrient, rather it is due to an overall change to the environment in which food is manufactured, bought, prepared, and consumed. There is an increas e in highly processed foods made from cheap agricultural commodities having properties that promote appetite and increase consumption Hall argues that t his coupled with the demand for fast and convenien t meal s or snack s is the source of the obesity epidemic (Hall, 2018) is on what causes obesity and other diet related diseases, it is also important to understand why these diseases are of such a concern to society. Notwithstanding individual health concerns, Drewnowski (2004) argues that obesity is an important economic issue He states that the highest U.S. obesity rates occur in places with the lowest incomes and least amount of education. He argues that diets based on refined grains, added sugars, and added fats are more affordable than diets based on lean meats, fres h vegetables and fruit. Th e s e

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7 statements le d him to conclude that the biggest b arrier to diet change in obese Americans may simply be budget (Drewnowski, 2004) The theory that is of most concern in this paper became popular in 2003 when Greg Critse r published a book entitled Fat Land in which he explains his theory that the prevalence of high fructose corn syrup in the modern American diet is due to high sugar prices and low corn and high fructose corn syrup prices (Critser, 2003) Even before Critser published his book, concerns about the U.S. sugar quota program and how it a ffects the American food supply and econ omy were being circulated. In 1994 Noel Uri and Roy Boyd analyzed what would happen if the sugar quotas were eliminated. They concluded that such an elimination would reduce output for all producing sectors by about $2.85 bi llion and $2.95 billion for sectors outside of the agriculture industry. They found that there would be an increase of about $197 million in consumption of goods and services and about $121 million increase in welfare. Without the quotas, the government would lose about $15 million (Uri & Boyd, 1994) In 2015, a similar study was done by Beghin and Elobeid. They found that if the U.S. sugar program were to be removed consumer welfare would increase between $2.9 and $3.5 billion each year with an increase in sugar imports of about 5 6 million tons, all with minimal world sugar price increases. Their welfare finding s are because they only examined consum er welfare which would increase whereas Uri and Boyd (Uri & Boyd) looked at total welfare which takes into account the loss of welfare experienced by t he domestic sugar producers. Beghin and Elobeid also found that there would be between 17,000 and 20,000 jobs created in the food manufacturing and similar industries with the removal of the U.S. sugar program (Beghin & Elobeid, 2015)

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8 Another obesity and diet related disease economic issue is that of negative externalities of health care consumption. According to Cawley and Meyerhoefer, in 2005 88.2% of medical costs attributed to obesity were paid by health insurance companies, Medicare, and Medicaid. Due to how health insurance works this means that most costs associated with obes ity are ultimately paid by non obese policy holders (Cawley, 2015) In an effort to correct these negative externalities, various towns, cities, and jurisdiction have imposed taxes on sugar, high fructose corn syrup, or other sugar substitute sweetened produ cts. These taxes have been faced with both praise and opposition. Dr. Lisa Powell and her co authors s upporting such taxes examined the price elasticities of demand for sugar sweetened beverages, fast food, fruits, and vegetables and the association between price changes of these foods and body weight changes. They found that soda taxes had minimal impact on weight, but noted that t his might have been because the taxes were low. They also found that higher fast food prices are associated with lower weight outcomes for adolescents and lower fruit and vegetable prices were also generally associated with lowe r weight outcomes. They conclude that taxes on unhealthy food, and subsidies for healthy food should be considered as policy options to mitigate public health risks (Powell, Chriqui, Khan, Wada, & Chaloupka, 2013) In examining taxes Alexandra Wright, Katherine Smith, and Mark H ellowell argue that these taxes red uce demand of unhealth y food The use the term health taxes because they grouped taxes on all unhealthy goods such as alcohol, tobacco, and sweeteners together. In their syst ematic review, they examined 91 peer reviewed and 11 grey literature empirical studies of health taxes. They found that high tax rates on sugar sweetened beverages tend to have a positive impact on health outcomes and add to government revenue

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9 (Wright, Smith, & Hellowell, 2017) In their paper the y briefly out line some of the concern s circulating about such taxes. As such taxes have been levied in the United States, studies have been conducted to evaluate their effectiveness. In 2015, Berkeley sugar sweetened beverage tax of 1 cent per ounce R esearchers examined its effectiveness. They found that prices on taxed items increased in many but not all store s sales of taxed items declined, sale of untaxed substitutes rose, and overall consumer spending did not ris e T he y attributed the pattern of these changes to the tax (Silver et al., 2017) A similar study was conducted on the 1.5 cent per ounce Philadelphia soda tax by the research firm Catali na. Their main and highly publicized finding was that although sugar sweetene d beverage sales saw a decline within the city limits w h ere the tax was levied, soda sale s increase d outside of the city. ( Catalina, 2017) From studies that assert that high fructose corn syrup is a factor leading to obesity such as the Bray, Nielsen, and Popkin ( 2004 ) study to those that state it is simply due to our current way of life as Hall ( 2018 ) claims, in the literature there are differing opinions on the effect s of sugar and high fructose corn syrup on the human body. In this paper, the concern is not on how the two substances differ in their effect s on human health, but rather how the y affect the economy T here has been concerns about sugar trade quotas and whether they are beneficial to our economy (Drewnowski, 2004) This led Uri and Boyd along with Beghin and Elobeid to conduct their studies. In addition to these concerns statement s have been made and repeated that high sugar prices are due to sugar quotas which have led to the use of high fructose corn syrup as a substitute for sugar This in turn has led to lower food prices, and higher quantities of sweetened foods (Critser, 2003) These low prices and high quantities have b een combated with taxes.

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10 E xisting research on these taxes demonstrate that they have had an overall positive impact on health outcomes However, there are still some concerns about their effectiveness. Methods and Materials Throughout this paper different economic concepts and data sources will be used. Below is a description of these economic concepts and a listing of the data source s used Methods and Assumptions U sing the following datas ets and the graphing function in Excel this paper will graph sugar and high fructose corn syrup prices and consumption against one another. Using economic theory, both changes in price and consumption of these two substances will be evaluated with the a ssumption that food manufacturers always strive to maximize profits This will allow the researcher to assess their presence in the sweetened foods market over time. This paper will also look at similarities and differences in laws and ordinances that have been passed to correct market failure related to sugar and high fructose corn syrup. Sugar trade q uotas and sugar p rices To help explain theory that st ates the level of high fructose corn syrup on the market is due to cheap corn prices and high sugar prices, an understanding of sugar trade policy is necessary (Critser, 2003) Despite popular belief sugar has never been subsidized by the federal government, but as an in dustry has been able to maintain higher domestic prices compared to those on the world market through the implementati on of tariff rate quotas (TRFs). Sugar quotas have been in place almost completely without interruption since the first Sugar Act of 1934 (Wiltgen, 2007) Figure 1 shows US sugar prices compared to the world price since the 1960s

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11 TRFs allow for a specific quantity of a good to be imported each yea r with minimal duty, but im ports are capped at that quantity (Schmitz, Moss, Schmitz, Furtan, & H, 2010) Figure 2 depicts the graph of a tariff rate quota. I n figure 2 Q S is the quantity supplied domestically with free trade, Q D is the quantity demanded with free trade, the difference between Q S and Q D is the import amount with free trade, P W is the world price, Q S domestically with a TRQ, Q D the difference between Q D Q S the import amount with a TRQ, and 2 ultimately shows that with a TRQ domestic prices are pushed above the world prices, thus benefi tting domestic producers. 0 5 10 15 20 25 30 35 40 45 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Cents per pound World raw sugar price, yearly average US raw sugar price, New York, yearly average Figure 1 : World vs. UR Raw Sugar Prices Data sources: USDA ERS Table 3b World raw sugar price, USDA ERS Table 4 U.S. raw sugar price

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12 Because sugar and high fructose corn syrup are substitutes to some extent if these sugar quotas have kept sugar prices above that of high fructose corn syrup since its invention and market introduction in the late 1960s (Casey, 1976) then food manufactures would have an incentive to use high fructose corn syrup in place of at least some sugar as the goal of a ny business is to maximize profits Apart from the quotas there are other factors that affect the price of sugar and high fructose corn syrup such as advances in technology and shifts in high fructose corn syrup s main input, corn. Nevertheless, if high fructose corn syrup is cheaper over time an d food manufacturers are incentivized to use at least in part, the cheaper input of high fructose corn syrup th en the supply curve in the market for sweetened foods would shift to the right which leads to a higher quantity of food demanded and lower sweetened food price s Figure 3 shows these effects. The shift of the supply curve to the right may be due to several reasons which include the use of cheaper inputs like high fructose corn syrup as well as changes in the prices of Figure 2 : Effect of TRQ on Importer Adapted from Schmitz et al. 2010 Magnitude S D Q P P W Q D Q D Q S Q S S S D P Q P Q Figure 3 : Market for Sugar Sweetened Foods

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13 inputs and changes in technology. These are the economic theories that were used to justify the claim that Critser makes in his book. With high sugar prices due to the quotas, there was an incentive in the market to produce less expensive alternatives. The invention of high f ructose corn syrup offered that cheaper alternative to sugar, thus food manufacture r s were able to increase output and decrease their price compared to that prior to the invention of high fructose corn syrup To evaluate if this has indeed been the case, this paper will compare both price and consumption trends of sugar and high fructose corn syrup. I f there has been a declining trend in high fructose corn syrup prices, then food manufacture r s would have reason to decrease their use of suga r and increased their use of high fructose corn syrup. If this happened then eventually consumption of sugar would be less than that of high fructose corn syrup and the market for sweetened food and beverages would see the effect in figure 3 N egative ext ernalities of c onsumption Because it is believed that high sugar and low corn prices have led t o an increase in consumption of sweetened foods and drinks there has recently been multiple cases of municipalities imposing taxes on sweetened beverages One reason for imposing these taxes is to attempt to correct the market failure that higher consumption of sugar and its substitutes are said to cause. In the case of sugar and high fructose corn syrup resultant obesity and its associated medical costs creates spillover costs on healthy individuals As mentioned in the literature review Cawley and Meyerhoefer ( 2015 ) found that in 2005 88.2% of medical costs attributed to obesity were paid by health insurance com panies, Medicare, and Medicaid, thus most costs associated with obesity are ultimately paid by non

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14 obese policy holders (Cawley, 2015) T he non obese policy holders and tax payers are the third party paying the spillover cost of the negative externali ty; this is depicted in f igure 4 In figure 4, MP C is the marginal private c ost, MSC is the marginal social cost, MP B is marginal private b enefits, MSB is marginal social b enefits, Q e is the free market allocation, Q s is the socially efficient allocation, and DWL stands for dead weight loss which is also the spillover cost The difference between marginal private benefit (MPB) and marginal social bene fits (MSB) is the marginal damage done to those who do not consume medical care due to diet related diseases (Gruber, 2010) As figure 4 shows, with diseases said to be caused by consuming too much sugar or high fructose corn syrup such as obesity, the margin al private benefit outweighs marginal social benefits leading to a negative externality of consumption. The idea be hind the sugar or soda taxes is to correct this market failure by implementing a tax in the amount of the marginal damage of each unit of consumption. In figure 5, P e is the free market price, P s is t he socially efficient price and the price Figure 4 : Negative Externality of Consumption for Medical Care of thos e with Diet Related Diseases Adapted from Gruber, J. (2010) D 2 =MSB S = M PC= M S C D 1 =MPB Q P Q e Q s DWL Marginal Damage D 2 =MSB S=MC D 1 =MPB Q P Q e Q s DWL Marginal Damage = Tax P s +T P s P e Government Revenue Figure 5 : Negative Externality Corrected with a Tax

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15 received by producers, P s +T is the price paid by consumers By looking at studies done on taxes that have been levied in Berkeley, California and Philadelphia, Pennsylvanian and the legislation that put these law s in place successes and drawbacks of the la ws will be discussed. The goal is to identify components of each law that have done well and others that can be improved upon in an effort to offer a m ore effective version of the tax. Data Apart from the economic theories and models discussed above, this research also involves the use of data collected from the United States Department of Agriculture Economic Research Service The datasets used include world raw sugar prices (Table 3b), US raw sugar prices (Table 4), US high fructose corn syrup prices ( Table 9 ), US refined cane and beet sugar consumption ( Tab le 51), and US high fructose consumption ( Table 52 ). Results and Discussion Consumption and price analysi s To tes t the popular theory that there is more sweetened food on the market today due to lower production costs, which are in part due to manufacture r s substituting less expensive high fructose corn syrup in place of sugar the trends in price and consumption of these substances must be compared. First the differences in price will be evaluated B elow figure 6 shows the prices of both sugar and high fructose corn syrup from 1994 to present ; the graph does not reach farther back

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16 because the av ailable price data for high fructose corn syrup started in 1994 although price data for sugar reached much further back. theory, here we are looking at just the differences in price. For the theory to hold, high fructose corn syrup prices must be decreasing. Historically, this seems to have only held up until the mid 1990s. Figure 6 shows that since 1997 high fructose corn syrup prices have trended upwards which would mean that since this point the rightward shift of the supply curve depicted in figure 3 would not have occurred. From this data, it seems that since 1997 the price side of the theory has not held, but to fully evaluate the theory proposed by Critser, consumption levels also need to be looked at. Since the price of hi gh fructose corn syrup trended downward until 1997 it would make s ense for manufacture r s to continually decrease their use of sugar and increase their use of high 0 5 10 15 20 25 30 35 40 45 Cents per lbs Sugar HFCS Sources: USDA ERS Table 4 US raw sugar prices, USDA ERS Table 9 US price for high fructsoe corn syrup Figure 6 : Sugar vs HFCS Prices

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17 fructose cor n syrup in their products up until the price started trending upward Looking at the data, it seems that this was the case. In figure7, which shows the average number of calories consumed per person on a yearly basis, hig h fructose corn syrup consumption levels never quite beat out sugar. Al though there was a difference of less than 10 calories between the two consumption levels between the years of 1998 and 2004 sugar has remained more prevalent in the food supply than high fructose corn syrup. that sugar prices inflated by sugar policy coupled with the invention of cheaper high fructose corn s yrup led to a prevalence of cheap sweetened food on the market may have been true up until the mid 1990s. Six years before his book was published though these trends moved in the opposite direction s The increase in price and decline in high fructose corn syrup consumption may have been a response to health reporting, then later his book and others who published similar theories This 0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 400.0 Calories Available Daily Cane and beat sugar Hight fructose corn syrup Sugar + HFCS Sources: USDA ERS Table 51 Refined cane and beet sugar, USDA ERS Table 52 High fructose corn syrup Figure 7 : Sugar and HFCS Consumption

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18 was also around the time when studies such as that published by Bray, Ni elsen, and Popkin ( 2004 ) were publicized and many b ecame wary of what high fructose corn syrup would do to It is also important to note that the data shows a decline in combined consumption of sugar and high fructose corn syrup as can be seen by the gray line in figure 7 This too may be due to the recent negative press that all caloric sweeteners have gotten in the past decade. Their combined decline may also be due to an increase d presence of non caloric sweeteners such as those derived from saccharine, aspartame, and stevia being intro duced to the market. Despite their combined decreased consumption, obesity and diet related diseases are still an issue many are trying to solve. Externality and t axation analysis As discussed, the presence of obesity and other diet related diseases lead to market failure in the form of negative externalities of consumption. One way to correct such market failure is to impl ement a tax as previously shown in figure 4 As discussed i n the literature review there have been multiple cases of taxes imposed in the US to help curb some of these negative externalities. Here these case studies will be discussed more f ully in an effort to continue the discussion so that policy can continue to evolve in a beneficial way. In Berkeley, tax was put iminish the human and economic costs of diseases ( New Berkeley Municipal Code Chapter 7.72: S ugar Sweetened Bev erage Product Distribution Tax, 2015) To accomplish this goal, distributers of sugary dinks will be taxed one cent per ounce until January 1, 2027. Similarly, in Philadelphia, a tax of one and a half cents per o u nce is to be charged to dealers of sugar sweetened beverages starting January 1 2017 (Chapter 19 4100 of the Philabdelphia Code.

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19 Sugar Sweetened Beverage Tax, 2016) A lthough such taxes have been shown to limit the consumption of sugary drinks as shown in studies l ike th at conducted by Silver et al. ( 2017 ) the current tax es proposed by both jurisdiction s lead to a few issues. For a tax to completely correct the market failure, it must equal the marginal damage of each unit being consumed in the case of Berkley that wo uld be each ounce and in Philadelphia each ounce and a half. Determining such a value requires a knowledge of the external cost of consuming each unit which was not mentioned as a factor in coming up with the one cent or one and a half cent taxes levied in Berkeley and Philadelphia respectfully Figuring out what the amount of a tax that will completely cor rect the m arket failure may be difficult but doing would be ideal If the tax is equal to the marginal damage and the municipalities use the tax revenue to pay for the medical costs associated with diet related diseases, then the socially optimal price and quantity would be reached. This would also mean that by paying the tax when purchasing sugary drinks and snacks those with the diet related diseases seeking medical care would be paying their own medical cost s Another issue regarding the amount of the tax, is that both laws call for a steady tax through time In Berkeley, the tax is to continue at one cent per ounce until January 1, 2027 an d in Philadelphia the law only states an effective date not a termination date Although these laws can be amended, the way they are currently written they do not take infla tion into account meaning that as time passes the taxes will become less and less e ffective as inflation increases over time. Although the Berkeley and the Philadelphia tax are both still in place, there have been cases of similar taxes failing in location such as Cook County, Illinois (Powell & Maciejewski, 2018) The main difference between the taxes that are still in place and those that have been

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20 repealed is where the tax r evenue has gone. I n areas like Berk e ley and Philadelphia the tax revenue has been used to fund specific education al and health related projects, which Powell and Macie jewski (2018) speculate is why their where it was never entirely clear where the tax revenue went Although this is not directly related to how effective the law is, if the law is effective it is important that it is well received so that it does not risk being repealed, thus considering how the t ax revenue is used is an important consideration. As noted earlier, an issue that studies have found in Philadelp hia is that consumers are traveling outside of w h ere the tax applies in order to buy the same sugary drinks without the tax. This is an issue that might be able to be solved if the tax were over a larger jurisdiction such as a county or even a state. This would prevent patrons from being able to avoid the tax by simply traveling to the suburbs. Although there has been research showing that taxes have had positive impacts o n weight loss (Powell et al., 2013) the negative externalities of consuming sugar do not arise solely fro m sug ary beverages. If the goal is to completely eliminate the welfare loss from the negative externalities that arise from consuming sugar and its substitutes, then all sugar, high fructose corn syrup, or other sweetener containing beverages and foods would ha ve to be taxed Another issue surrounding sugar taxes is their effect on food deserts. Those living in food deserts, or areas where the only food available is that from fast food restaurants and gas station convenience stores often belong to lower socio economic levels (Ploeg, Dutko, & Breneman, 2015) If sugar taxes are levied in these areas then an issue of food affordability arises. If taxes were to be levied on all added sugar containing products this issue would be magnified even further Although food desert populations also tend to have higher than average levels of obesity

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21 and diet related diseases (ibid) and these taxes may help combat those statistics increasing the price of food even if i t is only some of the food supply, without providing untaxed alternatives is not a viable solution as it would only put those living in food deserts at a greater disadvantage In the areas where sugar and soda taxes have been implemented there has b een b oth positives and negatives observed. For the most part they are effective at doing what they were designed to do: limit consumption of sugar sweetened beverages. What they do not do though, is completely eliminate the negative externalities of sugar consu mption. They fall short of doing this because the taxes being levied do not take marginal effect or damage into account and they only apply to certain drinks not to everything that has added sugar. Another issue that has been observed is that in some areas consumers simply avoid the tax by shopping in nearby jurisdi ctions where there is not a tax. In order to fix these issues though, other problems arise such as creating more of a burden on already at risk populations There has also been cases of sugar sw eetened beverage taxes being repealed which has been said to be due not because they were ineffective but because the tax revenue was not being used in a way that pleased the public. Recommendations and Conclusion Obesity, type two diabetes, and other diet related diseases have become major issues in the United States and aro und the world. Many have studied the causes of the se diseases and many have speculated about what has led to the amount of sugar and its substi tutes in our food system and the amount consumed by consumers In his book Fat Land, Greg Critser popularized the theory that high sugar prices due to sugar quotas led to the invention of the cheaper hig h fructose corn syrup which has led to lower prices a nd a higher quantity supplied of sweetened food. This study tested that theory and found that through applying economic theory, it

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22 does not make theoretical sense. Examining data for sugar and high fructose corn syrup prices and consumption since the invention of high fructose corn syrup until the early 2000s theory does not hold H igh fructose corn syrup prices started to trend upward as early as 1997 which means his theory may have at one point held but at the time he published it, it no longer did. At around the same time Fat Land and other literature was published the trend of increasing high fructose corn syrup prices became even more prevalent so much so that s ugar prices are now below that of high fructose corn syru p. H igh fructose corn syrup consumption has never been greater than that of sugar and is now falling steeply as sugar is hol d ing relatively stable The theory popularized by Critser in Fat Land may have been true at one time, but since it was published there has been less overall consumption of caloric sweeteners which may be the result of the publicized concern of obesity and its causes Despite this publicity and the introduction of low and no calorie sweeteners the obesity and diet related disease epidemics a re still plaguing our society. There is a need for further research on the prevalence these new sweeteners and the effect they have on the market this paper also examined different taxes that have been levied across the country in efforts to decrease the consumption of sugar and its substitutes As a policy option to combat obesity and other diet related diseases taxes have been placed on sweetened food and drinks, but mainly on sod as. There have been numerous case studies of these taxes which have found they are effective However, due to some of the evaluated drawbacks discu ssed in this paper there needs to be more research on the effectiveness of such taxes being implemented in a ddition to other policies such as subsidies t hat are implemented to encourage consumers to purchase healthier options such as fresh fruits and vegetables and drinking water.

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23 References Corn Refiners Association (2018). About High Fructose Corn Syrup. Retrieved from https://corn.org/products/sweeteners/high fructose corn syrup/ Beghin, J. C., & Elobeid, A. (2015). The Impact of the US Sugar Program Redux. Applied Economic Perspectives and Policy, 37 (1), 1 33. doi:10.1093/aepp/ppu028 Bray, G. A., Nielsen, S. J., & Popkin, B. M. (2004). Consumption of high fructose corn syrup in beverages may play a role in the epidemic of obesity. Ameri can Journal of Clinical Nutrition, 79 (4), 537 543. Casey, J. P. (1976). High Fructose Corn Syrup A Case History of Innovation. Research Management, 19 (5), 27 32. Catalina. The Great Philadelphia Sugar Rush. (2017) https://www.catalina.com/insights/res earch studies/the great philadelphia sugar rush/ Cawley, J. (2015). An economy of scales: A selective review of obesity's economic causes, consequences, and solutions. Journal of Health Economics, 43 244 268. doi:10.1016/j.jhealeco.2015.03.001 Chapter 7.72 of the Berkeley Municipal Code: Sugar Sweetened Beverage Product Distribution Tax, (2015). Chapter 19 4100 of the Philabdelphia Code. Sugar Sweetened Beverage Tax, BILL NO. 160176 C.F.R. (2016). Critser, G. (2003). Fat Land New York: Houghton Miffli n Company. Drewnowski, A. (2004). Obesity and the food environment Dietary energy density and diet costs. American Journal of Preventive Medicine, 27 (3), 154 162. doi:10.1016/j.amepre.2004.06.011

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