Short-term Health Effects of Soda Taxes in Areas with Low Access to Safe Drinking Water

Obesity is becoming a large problem in developing countries. Academics and policy-makers have advocated for taxing sugary drinks to contain the epidemic. We ask whether soda taxes may have negative short-term health effects in... [ view full abstract ]

Obesity is becoming a large problem in developing countries. Academics and policy-makers have advocated for taxing sugary drinks to contain the epidemic. We ask whether soda taxes may have negative short-term health effects in areas where clean drinking water is unavailable. Focusing on an excise tax in Mexico, we find a significant but focalized and temporary increase in outpatient gastrointestinal disease rates, without any effects on hospitalizations. The social cost implied by our results is much smaller than the gains from the tax. However, our findings indicate the need for targeted policies that guarantee safe drinking water in these hotspots of vulnerable populations.