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Study: Big soda price hike means big sales drop

Tops of soda cans

TEXT OF INTERVIEW

Bill Radke: A can of soda for $2.95? The beverage industry has spent millions lobbying against a soda tax, but states keep floating the idea as a way to boost budgets and cut down on obesity. Now astudy has come out showing a clear link between the price of soda and how much we drink. Joining me live to talk about this from our health desk at WHYY in Philadelphia, Gregory Warner. Good morning.

Gregory Warner: Good morning.

Radke: So we know drinking soda is bad for us. Why is this study significant?

Warner: Well all the other studies have shown that small increases in the price of soda didn't really affect how much we drink. In this study, researchers really jacked up the price of non-diet soda from a $1.25 to $1.60, and they did it in a hospital cafeteria so they could get away with that. And sure enough, sales dropped by 26 percent.

Radke: Well Gregory, that sounds like Econ 101, isn't it? You raise and people will buy less of it?

Warner: Sure it is, but politically, it is signficant. Because so far, the idea of this soda tax hasn't gone anywhere. There was going to be a soda tax in the health care reform bill, but that never made it into the final version. Here in Philadelphia the city, just voted down a soda tax after major resistance from vendors who said that taxes don't do a lot about obesity. This study suggests that small taxes may not do much, but a big tax, 30 [percent], 35 percent, could put a dent in the obesity problem. And then you get an argument like we've seen with cigarette taxes where the tax is not only good because it raises money, it also lowers consumption and that decreases health costs.

Radke: I'm just curious Gregory: According to this study, when people aren't buying the soda, what were they buying?

Warner: Diet soda. And coffee.

Radke: And coffee. OK. I wonder how Starbucks feels about a soda tax. Gregory Warner, thank you.

Warner: Thanks, Bill.

About the author

Gregory Warner is a senior reporter covering the economics and business of healthcare for the entire Marketplace portfolio.

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