When I was in graduate school at UC Berkeley, one of the policies that we were getting evidence of at the time was a new policy that was being implemented in local governments in the Bay Area. This was the taxation of sugar-sweetened beverages. In the media, these are often referred to as a “soda tax.”
While taxation of sugar-sweeted beverages is a potential revenue source for local governments, the key justification for the policy was based on public health. In particular, policymakers argue that taxation of sugar-sweetened beverages discourages their consumption and could be a tool for curbing the obesity associated with them.
Obesity is considered by many in the public health community to be a rising epidemic in the United States. Obesity is associated with heart disease, diabetes, sleep apnea, cancer, and fatty liver disease. According to the Centers for Disease Control and Prevention, about two in five Americans are obese.
At Scioto Analysis, one of the frameworks we use for policy analysis is human development. Broadly, the human development framework argues that a society built on human freedom requires certain basic goods that help people live the multitude of lives they wish to live. Measurements of human development like the Human Development Index focus on three major basic goods: income, health, and education. The idea is that any conception of the good life will require income to purchase goods, health to use your body and mind to pursue activities, and education to contribute to your own well-being and the well-being of others.
So the public sector has an interest in promoting health. How have they undertaken that interest by targeting soda?
One high-profile example of public policy taking aim at sugar was the 2012 soda cup regulation proposed by Mayor Michael Bloomberg of New York. Bloomberg proposed that cups filled with soda sold in the city would be limited to 16 fluid ounces as a way to discourage excessive consumption. While the law was struck down by a state court before it went into effect, the proposal became infamous as an example for many of the overreach of public health policy into the lives of individuals.
Regulation of sugar is still alive and well in 2025. Last month, Governor Mike DeWine of Ohio announced his intention to ban the use of SNAP benefits on soda and sugary drinks. Some saw this as paternalistic and others pointed out that many families are likely to simply shift their spending of SNAP benefits to other groceries and buy soda with their own money. Others saw it as a step for promoting healthy lifestyles for a segment of the population that has higher rates of obesity, at least among women.
This comes a decade after many school districts across the country banned soda in schools. These bans seem to show some impacts on consumption of soda and sugar-sweetened beverages by children.
The underlying tension in the public policy sphere should be becoming clear to you here. On the one hand, we have human development. People need to be healthy to pursue the experiments of living they wish to choose. On the other hand, many of the policy tools we use to curb soda are at least slightly paternalistic. This means that the government is, in a small way, limiting the experiments of living people can carry out.
As policy analysts, the way we would model the costs of these policies is through economic analysis. The benefit of economic analysis is that it gives us a framework for modeling desires and their strength. Policies like taxes on sugar-sweetened beverages, regulations on sizes of cups, limits on what SNAP benefits can be used on, and banning of soda in school can be analyzed using microeconomic models to estimate what the aggregate loss of welfare is that arises from policies.
There are complications that occur when it comes to consumption. A body of evidence suggests that sugar consumption leads to addiction that looks neurologically similar to drug abuse. If this is the case, then some key assumptions of our models of rational consumption start to break down. Right now, we are working with an intern on a cost-benefit analysis of cigarette taxes in Ohio. The evidence of the addictive properties of nicotine is much more well-worn than the evidence of sugar addiction, and we are still finding economic modeling of cigarette addiction and policy interventions to curb it challenging. Incorporating sugar addiction into an economic model would be a challenge entirely of its own.
Another place I am interested in the impact of this policy is on subjective well-being. I consider this the frontier of public policy: how does public policy impact how we assess our own lives? According to the Mayo Clinic, soft drinks are a cause of obesity and obesity can lead to symptoms such as depression, disability, shame, guilt, social isolation, and lower work achievement. If regulation of sugar-sweetened beverages can lead to lower consumption and if lower consumption leads to lower obesity rates, this could also help curb these quality of life symptoms and could improve subjective well-being. I would like to see some more evidence, though, to see if this is the case.
Across the United States, the average American consumes dozens of gallons of soda per year. There is a substantial variation between regions of the country, though. The average Hawaiian consumes less than two dozen gallons of soda per year. The average Missourian, on the other hand, consumes over four dozen gallons of soda per year. This suggests that there could be greater yields for state governments in different parts of the country. Given that the top 14 states with the highest per-capita consumption are Midwest or Appalachian, the regional trends suggest a place to start.
Ultimately, it will be up to policymakers to decide how to trade off public health and paternalist considerations in the regulation and taxation of soda. In the meantime, analysts like us can help them understand these impacts quantitatively. Creating a better framework for understanding the potentially addictive nature of sugar could go a long way to helping promote public health while still allowing for personal choice.
