The Welfare and Nutritional Effects of Threshold

The Welfare and Nutritional Effects of Threshold Sin Taxes:

Evidence from the UK Soda Tax

Speaker: Jiajia Zhan

Ph.D. Candidate in Economics

Imperial Business School

Time: 13:30-15:00, Oct.27^th (Tuesday), 2026

Venue：Siyuan Building, Room 624

MC: Prof. Liyin Jin

Abstract:

We study the UK sugar tax, which only applies to beverages with sugar content above a threshold and triggered widespread reformulation. We estimate a structural model of beverage demand and firms' price setting using household-level data from before and after the tax. We find that the tax reduced sugar consumption from beverages by 47%. Monetized health gains (from externalities and internalities) outweigh the consumer welfare loss, leading to an increase in total welfare. Reformulation accounts for 29% of the sugar reduction at almost no cost to consumers, although it halves tax revenue. Matching the UK's sugar reduction with a volumetric tax requires nearly double its rate and imposes a much greater consumer welfare loss. Broadening the tax base to diet beverages leads to less sugar reduction and a higher consumer welfare loss. Both alternatives raise more tax revenue, but neither matches the threshold tax's total welfare gain.

Bio:

Jiajia Zhan is a Ph.D. Candidate in Economics at Imperial Business School, advised by Professors Stephan Seiler and Carol Propper. Prior to her PhD, she obtained both a Master’s and a bachelor’s degree in Economics from Peking University. Her research focus lies at the intersection of quantitative marketing, empirical industrial organization, digital platforms, and public policy. She combines causal inference, structural modelling, field experiments, and machine learning to study how platform and policy design shape consumer choices, firm behavior, as well as welfare and equity outcomes, particularly in health-related and socially consequential markets. Her research has been published in the Journal of Marketing Research, the Journal of Economic Behavior & Organization, and Health Policy and Planning.