Impact of the SSB Tax in Boulder on Prices

In an attempt to reduce the consumption of sugar-sweetened beverages (SSBs), stem the rise in obesity, and generate government revenue, taxes on SSBs have become increasingly common across the country. Boulder, Colorado, implemented the largest SSB tax to date on July 1, 2017, increasing the price of SSBs by two cents per ounce. To understand how the tax influences consumers, this paper uses multiple data sources to estimate the impact of the SSB tax in Boulder on prices of SSBs and prices of non-SSBs.

The first data source is comprised of hand collected prices of beverage items from retailers and restaurants in April, June, August, and October of 2017. The second source is a collection of online restaurant menus from Grubhub.com and Orderup.com, which were collected weekly from March to October of 2017. The final data source is comprised of beverage prices from retailers listed on Instacart.com and Walmart.com, which were collected weekly from November, 2016 to October, 2017. Price data from each source contains observations both within Boulder and directly outside of Boulder. We compare the changes in the price per ounce of SSBs and non-SSBs over time in Boulder compared to the changes during the same period in Boulder County (outside the city) and Fort Collins. The multiple periods of data before implementation allow us to determine if Boulder County and Fort Collins are appropriate comparison groups to Boulder in that the parallel trends assumption is satisfied. Analysis demonstrates that the trends in prices over time prior to July 1 are similar in Boulder and in the rest of Boulder County and Fort Collins.

Preliminary estimates indicate that, on average, 50 percent of the SSB tax was passed on to consumers. These pass through results are heterogeneous across firm type, beverage type, and beverage size, varying in magnitude between 30 to 80 percent pass-through. We also find that the price of non-SSB soft drinks significantly increase in Boulder restaurants after the implementation of the tax. Further, with the data dating back to the beginning of November, 2016, prior to the election when voters voted in favor of the tax, we are able to determine if there is a change in price in response to the election as well as the implementation.