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Consumer food choices. The role of price and pricing strategies

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Consumer food choices. The role of price and pricing strategies

Abstract

To study differences in the role of price and value in food choice between low-income and higher-income consumers and to study the perception of consumers about pricing strategies that are of relevance during grocery shopping. A cross-sectional study was conducted using structured, written questionnaires. Food choice motives as well as price perceptions and opinion on pricing strategies were measured. The study was carried out in point-of-purchase settings, i.e. supermarkets, fast-food restaurants and sports canteens. Adults (n 159) visiting a point-of-purchase setting were included. Price is an important factor in food choice, especially for low-income consumers. Low-income consumers were significantly more conscious of value and price than higher-income consumers. The most attractive strategies, according to the consumers, were discounting healthy food more often and applying a lower VAT (Value Added Tax) rate on healthy food. Low-income consumers differ in their preferences for pricing strategies. Since price is more important for low-income consumers we recommend mainly focusing on their preferences and needs.
Public Health Nutrition: 14(12), 2220–2226 doi:10.1017/S1368980011001637
Consumer food choices: the role of price and pricing strategies
Ingrid HM Steenhuis*, Wilma E Waterlander and Anika de Mul
Department of Health Sciences and the EMGO Institute for Health and Care Research, VU University
Amsterdam, De Boelelaan 1085, 1081 HV Amsterdam, The Netherlands
Submitted 28 July 2010: Accepted 3 June 2011: First published online 14 July 2011
Abstract
Objective: To study differences in the role of price and value in food choice between
low-income and higher-income consumers and to study the perception of con-
sumers about pricing strategies that are of relevance during grocery shopping.
Design: A cross-sectional study was conducted using structured, written ques-
tionnaires. Food choice motives as well as price perceptions and opinion on pricing
strategies were measured.
Setting: The study was carried out in point-of-purchase settings, i.e. supermarkets,
fast-food restaurants and sports canteens.
Subjects: Adults (n159) visiting a point-of-purchase setting were included.
Results: Price is an important factor in food choice, especially for low-income
consumers. Low-income consumers were significantly more conscious of value and
price than higher-income consumers. The most attractive strategies, according to the
consumers, were discounting healthy food more often and applying a lower VAT
(Value Added Tax) rate on healthy food. Low-income consumers differ in their
preferences for pricing strategies.
Conclusions: Since price is more important for low-income consumers we recom-
mend mainly focusing on their preferences and needs.
Keywords
Pricing
Low income
Pricing policy
Consumers
Dietary intake (e.g. fat, fruit and vegetable consumption) has
been found to be important in the prevention of CHD,
several types of cancer and obesity. Despite numerous
efforts to change dietary behaviour with educational pro-
grammes, large proportions of the population still do not
comply with dietary guidelines, defined by the WHO and/or
national bodies, and the effect of these programmes remains
minor
(1,2)
. It is being increasingly acknowledged that policy
and environmental interventions should be put in place as,
for example, has been done in the case of smoking
(3–5)
.
Pricing policy is suggested as being a powerful way to
influence dietary behaviour, and might be especially suitable
for reaching low-income groups. Low-income groups have
a far lower life expectancy than high-income groups and
part of this can be explained by lifestyle behaviours, such as
dietary behaviour. Being overweight and obesity are also
more prevalent among low-income groups
(6)
.
Pricing strategies (e.g. price reductions/increases, the
‘buy one get two’ strategy, bonus systems) are seen as a
promising approach because sales promotions form an
important part of the marketing mix
(7,8)
. Furthermore,
research has shown that energy-dense foods tend to be
cheaper than low-energy-dense foods, and that diets that
comply more with dietary guidelines are more expensive
than diets that comply less
(9,10)
(alsoWEWaterlander,Ivan
Amstel, WE de Haas et al., unpublished results). In parti-
cular, low-income consumers might experience financial
barriers to healthy eating due to restraints in available
resources
(9)
. Finally, various studies showed pricing to be a
determinant in food choice, next to taste and quality
(11–13)
.
Few intervention studies have been conducted using
pricing policy thus far. These previous studies suggest that
consumers respond to changes in food prices
(14–18)
.
Although pricing intervention studies showed positive
effects, they were limited to a small number of products
and were conducted in small-scale settings. There is an
ongoing debate as to whether large-scale pricing policies
should be implemented to stimulate healthy eating, such as
taxing or providing subsidies on healthy products pur-
chased in the supermarket. Intervention studies analysing
these kinds of measures are extremely scarce, due to
compleximplementationissues.Areviewconductedby
Andreyeva et al. into price elasticity of demand of several
food items showed that mainly food eaten away from
home, soft drinks, juice and meat are most price sensi-
tive
(19)
. Still, they could not draw conclusions on the effect
of price changes on shifting from unhealthy to healthy
food, nor on specific behaviour for at-risk groups such as
low-income consumers
(19)
. Duffey et al. used observational
data to model the potential effects of taxing several high-
energy products
(20)
. Results indicated a potential beneficial
effect of taxing soft drinks and pizza. A modelling study
conducted by Nnoaham et al.alsoshowedpromising
effects of a tax on unhealthy food items combined with a
*Corresponding author: Email ingrid.steenhuis@falw.vu.nl rThe Authors 2011
subsidy on fruits and vegetables on population health by
preventing CVD and cancer
(21)
. Another study of Epstein
et al. used a laboratory setting in which participants had to
perform a hypothetical shopping task
(22)
. They found that
taxing less healthy foods (with low nutrient density)
reduced purchased energy and improved the macro-
nutrient profile of purchased food. Subsidizing healthy
food items, however, increased purchased energy, without
any effects on the macronutrient profile. Trials are needed
in which such measures are tested in real-life settings. Ni
Mhurchu et al. conducted a randomized controlled trial in a
supermarket setting, with price discounts on healthier food
items
(23)
. Their study found significant effects of discounts
on the purchase of healthier food items; however, no effect
was found on the primary outcome which was change in
percentage energy from saturated fat in supermarket
purchases. There is a need for more intervention studies
using pricing strategies that can be implemented on a large
scale in point-of-purchase settings such as supermarkets.
Due to complex implementation issues, and political and
ethical concerns, it is important to first identify promising
pricing strategies with respect to potential effectiveness,
feasibility and acceptability among adopters and users of
the intervention. Waterlander et al. identified some poten-
tial pricing strategies based on expert opinions in the
Netherlands
(24)
.Amongthesestrategiesweretaxingand
subsidizing, but also marketing techniques such as sales
promotions or providing small gifts alongside products
with a favourable product composition. To ensure optimal
implementation and to anticipate possible effects and side-
effects, it is also of importance to study consumers’ opi-
nions on pricing issues and pricing interventions. A first
qualitative study was reported by Waterlander et al. into the
perceptions of Dutch low-income consumers about pricing
strategies to stimulate healthy eating
(25)
. Price was con-
sidered a core factor in food choice and pricing strategies to
encourage healthy eating were favoured more than strate-
gies aiming at discouraging unhealthy eating. One of the
most promising strategies, according to low-income con-
sumers, was a healthy food discount customer card
(25)
.The
aforementioned study was qualitative, and aimed to iden-
tify key issues, ideas and thoughts of low-income con-
sumers about price and pricing policy and strategies. In that
study, price was used as a broad, general concept to discuss
economic factors in buying food. It did not take into
account the different concepts of ‘price’ and ‘value’. Price
can be seen as ‘the amount of money charged for a pro-
duct’, whereas value relates this price to the perceived
benefits of having the product
(26)
.Price,aswellasvalue,
influences the willingness to buy a certain product, i.e.
(healthy) food products. The aims of the current, quanti-
tative study are: (i) to study the differences in the role of
both price and value in food choice between low-income
and higher-income consumers; and (ii) to study the per-
ception of consumers about pricing strategies that are of
relevance during grocery shopping. With the present study,
results of the former qualitative study will be quantified and
price and value aspects will be studied more precisely. The
results will guide further development of interventions in
the economic food environment.
Methods
Design and study population
A cross-sectional survey was conducted by means of
structured, written questionnaires. It took approximately
15 min to fill out the questionnaire. Purposive sampling
was used to obtain a sample of Dutch consumers aged
from 18 years onwards. An effort was made to include
both low- and higher-income consumers by selecting
settings in neighbourhoods with a mixed composition.
Respondents were recruited in several point-of-purchase
settings, i.e. supermarkets (n2), fast-food restaurants (n2)
and sport canteens (n1). Recruitment took place in the
morning and afternoon hours.
Measurements
General characteristics of respondents were asked:
gender (male/female), age (continuous), ethnicity (open
question), educational level (five categories following the
standard Dutch educational system), work status (work-
ing, unfit for work, unemployed, retired, student), gross
annual income (six categories from less than h10 000 to
more than h40 000), household size (continuous) and an
estimation of weekly expenses on food groceries (six
categories from less than h50 to more than h150).
The role of price in food choice was measured alongside
other food choice motives, based on the Food Choice
Questionnaire
(27)
. We used nineteen items compared with
thirty-six items in the original Food Choice Questionnaire.
The following motives were measured: price (three items),
health (two), mood (two), convenience (two), sensory
appeal (three), natural content (two), weight control (three)
and familiarity (two). All items used a 5-point Likert scale,
from ‘not important at all’ to ‘very important’. An example
of an item is: ‘It is important to me that the food I eat on a
typical day gives value for money’ (item of price factor).
To gain further insight into the role of price and value,
a shortened version of the Price Perception Construct
Scale Items of Lichtenstein et al. was included in the
questionnaire
(28)
. This scale measures aspects of price
perception that influence willingness to buy products. The
following constructs were measured: price–quality schema
(i.e. the belief that the level of price is positively related to
the quality of the product; two items), value consciousness
(three), price consciousness (three), coupon proneness
(two) and sale proneness (two). A 5-point Likert scale was
used for each, ranging from ‘totally disagree’ to ‘totally
agree’. An example of an item is: ‘I have favorite brands,
but most of the time I buy the brand that’s on sale’ (item of
sale proneness).
Price perceptions and pricing policy 2221
Pricing strategies
Respondents’ opinions were asked on a number of pricing
strategies. These pricing strategies were derived from two
studies that were conducted earlier. The first one was a
Delphi study among experts on most suitable monetary
incentives to stimulate healthy eating
(24)
. The second was a
focus group study among consumers in which potential
pricing strategies were discussed
(25)
.Table1showsthe
pricing strategies that were included in the questionnaire
used in the current study. Four questions were asked about
each strategy: one item with respect to the attractiveness of
the strategy, one about the potential effectiveness in terms
of eating more healthy foods, one about the potential
effectiveness of eating less unhealthy foods, and finally one
item on whether the strategy was perceived as patronizing.
All items had 5-point Likert scales ranging from ‘not at all’ to
‘very much’.
Statistical analysis
Educational level was recoded into three categories cor-
responding to the commonly used classification in the
Netherlands: low (primary school or basic vocational edu-
cation); medium (secondary vocational education or high-
school degree); and high (higher vocational education or
university degree). Income level was also recoded into three
categories:low(e.g.belowstandard,h20 000), medium
(e.g. around standard h20 000–h30 000) and high (e.g. above
standard .h30000). The standard net annual income in the
Netherlands in 2010 was h19 367
(29)
. Mean scores were cal-
culated per food choice motive, ranging from 1 to 5, and also
for the different constructs of price perception. Reliability of
these factors was analysed using Cronbach’s alpha. All food
choice motives had a Cronbach’s aof 0?70 or higher, except
for the factor ‘convenience’, for which a50?49. Regarding
the price perception constructs, Cronbach’s aof 0?75 and
higher were found. Independent ttests were used to test for
differences between low- and high-income respondents
with respect to food choice motives, the constructs of price
perception and the perception of pricing strategies.
Results
Respondent characteristics
In total, n159 agreed and indeed participated (approxi-
mately 250 respondents had to be asked to reach this
number). The mean age of the respondents was 37?7
(SD 17?4) years. The average number of people living in
their household (respondents themselves included) was
2?7(
SD 1?5). Table 2 shows other characteristics of the
respondents. More than half were female. The majority
were of Dutch ethnicity with a small group of Turkish–
Dutch background, one of the largest immigrant groups in
the Netherlands. About 40 % of the respondents had a low
income level (n61), and a comparable proportion had a
high income level (n68).
Role of price and value in food choice
All measured food choice motives were, to some extent,
of importance to the respondents, with sensory appeals
and health reasons being the most important motives for
the entire research group (mean score (SD)4?1(0?7) and
3?9(0?7), respectively). Figure 1 shows the mean scores
on food choice motives for low (n61) and high (n68)
income respondents. For the low-income group, com-
pared with the high-income group, price was significantly
Table 1 Pricing strategies
Pricing strategy
1. Healthy food options at a lower VAT* rate
2. Tax rise on unhealthy food items
3. Bonus for low-income consumers assigned when a certain
amount of healthy products are purchased
4. Discounting healthy food options more often
5. Offering an additional healthy product for free on the purchase of
a healthy product
6. Offering small presents/extras with healthy food items
7. Making unhealthy products more expensive in order to finance
subsidies on healthy food items
8. ‘Buy one, get two’ for healthy food items
*VAT, Value Added Tax; the standard VAT rate in the Netherlands is 19 %.
Table 2 Characteristics of respondents (n159), the Netherlands
%n
Gender
Male 40 64
Female 58 92
Unknown 2 3
Ethnicity
Dutch 83 132
Turkish–Dutch 8 13
Other 9 14
Educational level
Low 13 20
Medium 31 50
High 52 83
Unknown 4 6
Work status
Working 58 92
Unfit for work/unemployed 8 13
Retired 11 18
Other (i.e. student) 17 27
Unknown 6 9
Annual household income
Low (,h20 000) 38 61
Medium (h20 000–h30 000) 8 13
High (.h30 000) 43 68
Unknown 11 17
Weekly food grocery spending
,h50 13 21
h50–h75 23 36
h75–h100 18 28
h100–h125 18 28
h125–h150 12 19
.h150 10 16
Unknown 7 11
Age (years)
Mean 37?7
SD 17?4
2222 IHM Steenhuis et al.
more important (t(126) 53?29, P50?001; mean score (SD)
3?7(0?8) and 3?3(0?7), respectively), mood was sig-
nificantly more important (t(126) 53?47, P50?001; mean
score (SD)3?6(0?9) and 3?0(0?9), respectively), and also
being familiar with the products was significantly more
important (t(127) 52?15, P50?034; mean score (SD) 3?0
(1?1) and 2?6(1?1), respectively).
Scores on the price perception constructs were some-
what lower, with the highest scores on value consciousness
(mean 3?2, SD 1?05) and sale proneness (mean 3?0, SD 0?98)
for the entire research group. Figure 2 shows mean
scores for low- and high-income respondents. Low-income
respondents had significantly higher scores on value con-
sciousness (t(125) 52?69, P50?008; mean score (SD)3?4
(1?0)) and price consciousness (t(124) 52?66, P50?009;
mean score (SD)2?7(1?0)) compared with high-income
respondents (mean score (SD) 2?9(1?0) and 2?1(1?1),
respectively).
Pricing policy and strategies
Table 3 shows consumers’ judgement about the pricing
policies and strategies. The most attractive strategies,
according to the consumers, were discounting healthy
food more often and applying a lower VAT (Value Added
Tax) rate on healthy food. These strategies also had
relatively high scores on expectations that the measure
would lead to eating more healthy products. However,
expectations that these measures would lead to eating
less unhealthy food were somewhat lower. The least
patronizing pricing policy, according to consumers, was
to put healthy food in a lower VAT rate. They experienced
a bonus for low-income consumers when a certain
amount of healthy products are purchased and making
unhealthy products more expensive in order to finance
subsidies on healthy food items as most patronizing of
all the presented pricing strategies (see also Table 3).
Figure 3 shows the differences between high- and low-
income consumers with respect to their judgement about
the attractiveness of the pricing strategies. Some strategies
were favoured more by low-income consumers, includ-
ing the bonus for low-income consumers (t(127) 52?45,
P50?016; mean score (SD)3?6(1?3) v.3?0(1?5)), offering
an additional healthy product for free after the purchase
of a healthy product (t(125) 52?28, P50?024; mean
score (SD)3?9(1?1) v.3?4(1?4)) and the ‘buy one, get two’
strategy (t(125) 52?12, P50?037; mean score (SD)3?7
(1?3) v.3?2(1?3)). Although low-income consumers found
offering small presents or extras with healthy products
significantly more attractive than high-income consu-
mers (t(125) 53?17, P#0?01; mean score (SD) 2?6(1?5)
012345
Familiarity*
Weight control
Mood**
Convenience
Natural content
Price**
Health
Sensory appeal
Score
Fig. 1 Food choice motives among low-income ( ) and high-
income (&) consumers (n159), the Netherlands. Mean score
was significantly different between groups: *P,0?05,
**P,0?01
012345
Price consciousness**
Price-quality schema
Coupon proneness
Sale proneness
Value consciousness**
Score
Fig. 2 Price perception constructs motives among low-income
() and high-income (&) consumers (n159), the Netherlands.
Mean score was significantly different between groups:
*P,0?05, **P,0?01
Table 3 Consumers’ (n159) judgement of pricing strategies, the Netherlands
Attractive More healthy Less healthy Patronizing
(score 1–5) (score 1–5) (score 1–5) (score 1–5)
Pricing strategy Mean SD Mean SD Mean SD Mean SD
1. Healthy food at a lower VAT rate 4?21?13?71?33?01?32?51?3
2. Tax rise on unhealthy food items 2?81?52?81?42?71?43?21?3
3. Bonus for low-income consumers after certain amount
of healthy products purchased
3?31?43?21?42?81?33?31?3
4. Discounting healthy food more often 4?30?83?91?13?21?32?81?3
5. Additional healthy product for free 3?71?33?51?32?91?33?11?2
6. Presents/extras with healthy food items 2?31?42?21?42?11?33?31?4
7. Unhealthy food more expensive, to finance subsidies
on healthy food
3?41?33?31?33?01?33?01?3
8. ‘Buy one, get two’ for healthy products 3?41?33?31?32?81?22?91?2
Price perceptions and pricing policy 2223
and 1?9(1?2), respectively), this strategy received rather
low scores compared with the other strategies.
Discussion
The first aim of the present study was to examine whether
the role of price and value in food choice differed
between low- and high-income consumers. The second
aim was to study the perception of consumers about
pricing strategies that can be applied on a large scale.
Results indicate that price is an important factor in food
choice, and, not surprisingly, this counts especially for
low-income consumers. Since price is of importance to
this group, pricing strategies seem promising to influence
dietary behaviour. This is in line with results of other
studies into pricing strategies with respect to various
other health behaviours, such as smoking
(3)
or physical
activity
(30)
. Regarding which pricing strategy should be
put in place to change dietary behaviour, some remarks
can be made based on the study results.
First of all, it seems important to choose strategies that
are perceived as attractive by the target group. Results
clearly show that some strategies are perceived as being
more attractive than others. The most attractive strategies
found in our study were discounting healthy food items
more often and applying a lower VAT rate to healthy
food. Politically, the latter is a complex issue; however, it
should not be put aside immediately as experts in an
earlier study also had high expectations regarding the
potential feasibility and effectiveness of this measure
(24)
.
Yet, in that same study, it was concluded that experts had
the tendency to expect the most of pricing strategies for
which the implementation responsibilities could be
placed elsewhere (i.e. government v. industry), and mainly
the industry favoured the VAT measure. Discounting heal-
thy food more often, on the other hand, might be more
feasible in the short term, and is in accordance with the
relative high score we found on sale proneness compared
with the other price perception constructs as well. Also,
price promotions are suggested to have a bigger impact
than price reductions since consumers have the tendency
to buy a product just because it is on sale
(31)
. Finally,
value consciousness had the highest scores of the price
perception constructs, and low-income people scored
significantly higher than high-income consumers. This
underlines the importance of public health interventions
targeting the economic environment not only to focus on
price, but on value as well. Also, in future intervention
studies, effects should be evaluated separately for low-
and high-income consumers.
Second, it is of vital importance that the strategies to be
chosen are not only effective in encouraging eating more
products with a favourable product composition (such as
fruit and vegetables), but at the same time keep total
energy intake stable or preferably decrease total energy
intake. Comparable to a qualitative study into consumers’
opinions on pricing strategies
(25)
, we found that con-
sumers are more in favour of positive strategies (bonus or
subsidy) as opposed to negative strategies (tax rise).
However, these positive strategies might bear the risk that
total energy intake increases. In a study of Epstein et al.,
respondents performed a purchasing task in the labora-
tory
(22)
. Results indicated that taxing less healthy foods
reduced the total number of purchased energy, whereas
subsidizing healthy foods increased the total number of
purchased energy. Ni Mhurchu et al. found in their study
when discounting all healthier food products in a super-
market (i.e. core food products meeting Tick programme
criteria) that saturated fat purchases, total fat purchases
and energy density of the purchased food products did
not differ between the control (regular prices) and
experimental group (12?5 % discount). However, they did
find that the experimental group purchased a significant
higher quantity of healthier food products
(23)
.Itistherefore
worthwhile investigating whether a price rise of unhealthy
food items with parallel subsidizing healthy food items
avoids the risk of a stable or even an increase in total
energy intake while at the same time the preference of
consumers can be taken into account. Our results show that
a strategy in which the prices of unhealthy food items are
increased to finance subsidies on healthy food items is
favoured over a strategy consisting solely of a tax rise of
unhealthy food items (mean scores on attractiveness
respectively 2?8and3?4 on a scale from 1 to 5). Of course,
the definition of ‘healthy’ and ‘unhealthy’ food items is very
important in this respect. Nutrient profiling systems taking
different macronutrients as well as energy density into
account can be helpful in this
(32)
.
The present study has some limitations. We used
purposive sampling methods and, as a consequence, the
respondent group is not representative for the entire
Dutch population. Compared with the general popula-
tion, our respondents generally had a higher education
level
(33)
and a lower employment level
(34)
. Regarding
generalization, cultural differences might also play a
role. The acceptance of governmental interventions, for
012345
8. 'Buy 1, get 2'*
7. More expensive + subsidies
6. Presents/extras**
5. Additional product*
4. On offer
3. Bonus low income*
2. Tax rise
1. Lower VAT
Score
Fig. 3 Attractiveness of pricing strategies motives among low-
income ( ) and high-income (&) consumers (n159), the
Netherlands. Mean score was significantly different between
groups: *P,0?05, **P,0?01
2224 IHM Steenhuis et al.
example, might differ across countries. Another limitation
includes the use of shortened versions of the Food Choice
Questionnaire and the Price Perception Construct Scale.
We chose shortened versions because of reasons of time,
as respondents had to fill out the questionnaire right
away, in the point-of-purchase setting where they were
recruited. The use of shortened versions might have
harmed the validity and reliability of the scales. Regarding
reliability, all scales had sufficient Cronbach’s avalues,
except for the food choice factor ‘convenience’, which
should be interpreted with caution. Another limitation is
that we did not include other factors than level of income
that might influence sensitivity to price as well. For future
studies, it would be interesting to include such factors as
nutritional knowledge for example. Finally, the study is
based on self-reported opinions of consumers. Only
intervention studies can prove how consumers would
really react to pricing strategies. It could be that con-
sumers’ expectations on whether they would eat more
healthily as a result of the strategies do not fully comply
with their actual behaviour when confronted with price
measures.
In conclusion, the present study provides insights into
consumers’ perspectives towards pricing strategies.
Together with expert views it can provide a basis for
selecting appropriate pricing strategies to test in intervention
studies. Since price is more important for low-income
consumers we recommend mainly focusing on their
preferences and needs.
Acknowledgements
This work was supported by ZonMw, the Netherlands
Organisation for Health Research and Development
(grant number 120510002). There are no conflicts of
interest. I.H.M.S., W.E.W. and A.d.M. designed the study.
Data were collected by W.E.W. and A.d.M. I.H.M.S. and
A.d.M. conducted the analyses. I.H.M.S. drafted the
manuscript, with help from W.E.W. and A.M.
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... The cost of food may negatively influence the diversity of the diet and as such reduce the potential for obtaining an optimal quantity of micronutrients in low-income households. The price of food is a significant factor in determining purchasing decisions for low-income groups [21,22], and cheaper diets are frequently associated with increased energy density and lower nutrient quality compared to higher-cost diets [23]. ...
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Error in Text. In the Original Investigation titled “Food Price and Diet and Health Outcomes: 20 Years of the CARDIA Study” by Duffey et al, published in the March 8 issue of the Archives (2010;170[5]:420-426), an error occurred in the first sentence of the third paragraph of the Comment section on page 424. The sentence should have read as follows: “Using our price elasticities and the sample's mean daily energy, body weight, and HOMA-IR values, we estimate that an 18% tax, which is the level that was unsuccessfully proposed by the state of New York and is considered by others as a minimal tax, would result in a roughly 104-kcal decline in daily total energy intake among young to middle-aged adults and reductions of 2 pounds per year.”
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