Date of Completion

3-1-2013

Embargo Period

3-1-2013

Keywords

food economics, soft drink, soda, policy, Heckit, Nielsen, health, discrete choice, behavioral economics, decision theory

Major Advisor

Ronald W. Cotterill

Associate Advisor

Rigoberto Lopez

Associate Advisor

Rui Huang

Field of Study

Agricultural and Resource Economics

Degree

Doctor of Philosophy

Open Access

Open Access

Abstract

In Essay One, I estimate how demographic characteristics associate with habitual purchase of sweetened carbonated soft drinks (sCSDs), as different demographic groups respond to marketing variables controlled by the sCSD industry. My method and assumptions cleave neither to conventional economic analysis nor to medical and nutrition literature interested in sugar and soft-drink consumption. No assumption in my estimation process violates arguments in later essays. Results identify household purchase behaviors for relatively fine demographic groupings, are not linear in income or education level, and further vary by gender of the head of household and by type of sCSD industry marketing tool. The richness and detail of results appear to be unique, and capable of answering more questions than I ask in this work, validating the logic behind the uncommon methodology.

In Essay Two, I review empirical and theoretical results from medical/nutritional science on added sugars, obesity, and health, as well as psychology, decision theory, behavioral economics, neuroeconomics, and social psychology literature. Each explains mechanisms by which individuals may fail to maximize their own lifetime utility in their eating patterns. I offer a descriptive model and a framework that accommodate evidence indicating that conventional economic assumptions do not hold for some class of individuals in their dietary habits relative to high-energy, low-nutrient foods. The challenge to expand conventional rational-choice/demand theory may help economists better model actual consumer dietary behavior, or help economists embrace a partial inability to do so comprehensively. Either result should impact how economists assess demand and discuss policy options.

Essay Three explores types of market failure associated with sCSD consumption and options for correcting them. Policy recommendations to correct the full set of market failures flow from my empirical results and from my review of and linkage to scientific evidence provided by neighboring disciplines. Because policy proposals here, some extant some new, specifically address empirically verified mechanisms that seem to undermine utility-maximizing behavior, greater Pareto efficiency and better U.S. health outcomes should follow from careful adherence to this policy set – more than for any previously proposed policy set to reduce unhealthful food consumption that I have found.

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