International Food and Agribusiness Management Review Volume 17 Special Issue A, 2014 Costs of Taxing Sodium: A Lunch Meat Application1 William F. Hahna and Christopher G. Davisb aSenior Ag Economist, Market and Trade Economics Division, Economic Research Service, U.S. Department of Agriculture, 355 E Street, SW, Washington DC, 20024, USA bSenior Ag Economist, Market and Trade Economics Division, Economic Research Service, U.S. Department of Agriculture, 355 E Street, SW, Washington DC, 20024, USA Abstract The current American diet contains excessive amounts of sodium and saturated fat, which are high risk factors for cardiovascular disease (US Dietary Guidelines for Americans 2010). Recently, the Centers for Disease Control and Prevention (CDC) reported lunch meats to be the second highest source of sodium in American diets. Using 2006 Nielsen Homescan data and an AIDS framework, this study estimates the demand for eight disaggregated lunch meat products to determine the welfare costs associated with consuming these meat products. The estimated welfare analysis revealed that a tax rate that increases the price of the highest-sodium lunch meat (pepperoni) by 25 percent can reduce lunch meat consumption as well as lower the intake of lunch meat sodium by 20 percent. Keywords: lunch meats, sodium, welfare costs Corresponding author: Tel: + 1.202.694.5175 Email: W. Hahn:
[email protected] C. G. Davis:
[email protected] 1 The views expressed here are those of the authors, and may not be attributed to the Economic Research Service or the U.S. Department of Agriculture. 2014 International Food and Agribusiness Management Association (IFAMA). All rights reserved.