The Effectiveness of Sin Food Taxes: Evidence from Mexico

We measure the effects of two federal taxes in Mexico aimed at reducing obesity by taxing sugary drinks (SDs) and high caloric foods (HCFs). We use a weekly scanner panel dataset with more than 58,721 product barcodes. We find 6 percent lower SD consumption but no decrease in HCFs consumption. We find substantial substitution towards non-taxed goods, smaller unit sizes, and in the case of HCFs to higher calorie per gram foods. Overall, sugar consumption decreased 2 percent, saturated fat and cholesterol increased 2 and 6 percent, but total calories remained unchanged. Available evidence shows no effect on BMI.