Heterogeneous behavior, obesity and storability in soft drink consumption: A dynamic demand model

In this paper we applied a dynamic estimation procedure to inves- tigate the role of obesity on the demand for soda. The dynamic model accounts for storing behaviors, and allowed us to study price sensitiv- ity as well as sale sensitivity of soda consumers. By matching store level data to obesity data, we considered the eect of obesity rates on soda demand. We found that higher obesity rates were associated with a higher attitude to anticipate future needs and respond to sale prices. Conversely, according to our results, a higher rate of obesity was also associated to lower price sensitivity. We also considered how some obesity predictors aected the demand for soda. Our results contribute to the existing literature by raising important elements to help establish correct policies to ght obesity. For instance, our re- search suggests that a policy intervention restricting the magnitude of sales would be more successful than a tax increase in modifying the behavior of obese consumers.