Do grocery taxes cause less healthy purchasing behaviors? Theory and evidence from Circana data
We investigate the effects of grocery taxes on food-at-home purchasing behaviors through both theoretical and empirical lenses. We show theoretically that grocery taxes decrease (increase) healthy foods (unhealthy foods) using a simple consumer choice model modified to include grocery tax. We empirically test this theory using Circana (formally IRI) consumer network data spanning from 2013 to 2017. Our findings indicate that a one-percentage-point increase in grocery tax results in a 0.0760 decrease in the Healthy Eating Index (HEI). This impact is primarily observed among households with "needs improvement" diets, Supplemental Nutrition Assistance Program (SNAP)--eligible non-participants, and SNAP-eligible African Americans, who are particularly susceptible to the repercussions of increased grocery taxes.