Cornell study on Berkeley soda tax in error (Media outlets run with it anyway)

What do Tucker Carlson and the American Beverage Association have in common?
They are both promoting a Cornell University study that falsely interprets the Berkeley tax on sugary drinks.

The Cornell Chronicle, the Chicago Sun Times, the New Republic, Grist, Vox, Newswise and Futurity are some of the media companies that have used the Cornell study to criticize Berkeley's tax on sugary drinks. Even Berkeleyside, a local media company, linked to an article published by the Daily Caller titled "Berkeley’s soda tax fail". Rather than do their own analysis, Berkeleyside directed readers to the Daily Caller, which is owned by right wing media personality Tucker Carlson. The American Beverage Association has been using the study and subsequent media coverage as justification for their opposition to taxes on sodas and other sugary drinks. The ABA has been sending out press statements, one of which can be read following the Futurity.org article "Berkeley soda tax does a slow fizzle". As other cities in the United States debate taxes on sugary drinks, the Cornell study will be used for opposition arguments. The Chicago Sun Times editorial board mentioned the Cornell study in their opposition to a tax in Chicago.

The paper "The Incidence of Taxes on Sugar-Sweetened Beverages: The Case of Berkeley, California", authored by Cornell's John Cawley and David Frisvold, carries a misrepresentation of the Berkeley tax. Cawley and Frisvold contend that the tax failed in Berkeley, because the tax did not increase the price of sugary drinks as a deterrent to consumers. The paper holds the claim that tax failed because distributors were covering the tax, stabilizing the price of taxed drinks. The Cornell economists either misunderstood or chose to misrepresent the Berkeley tax. The Cornell paper is fundamentally wrong. The Berkeley tax was not intended to be a consumer cost. A tax at the register would place an unfair burden on lower income individuals. The tax was always intended to be covered by distributors as an operational cost. The price of soda was never intended to raised in Berkeley. The tax was not created to deter consumers by raising the price of soda. The tax was intended to deter consumers by raising awareness of the health costs of sugary drinks. A debate took place in Berkeley which introduced many people to the health issues pertaining to sugary drinks. The tax intended to change shopping habits through raised awareness.

In the first month of collection, the Berkeley tax on sugary drinks earned $116,000 for health and recreation programs in Berkeley. This revenue was collected from distributors and not paid by consumers, as intended in the verbiage of the tax. Cawley and Frisvold write that the tax failed because the tax was not collected at the register; the paper is flawed, as the tax was not intended to be a consumer tax.

Tedd Boscia, the director of communications and media for the College of Human Ecology, asserted in the Cornell Chronicle "Berkeley officials hoped that the soda tax would raise prices". The article printed by the Cornell paper is incorrect. The text of the tax reads "the tax would be payable by the distributor, not the customer." It was never the intention of 'Berkeley officials" to 'raise prices'. The tax is to be paid by distributors for the purpose of not raising prices for consumers, as to not place an extra burden on low income individuals. The tax acts as a deterrent by raising awareness of the issue, not by having consumers pay more for sugary drinks. The writer for the Cornell Chronicle calls the Berkeley tax a "sin tax' and tries to compare it taxes on tobacco products. The text of the Berkeley sugary drink tax does not contain language which draws any comparison to tobacco taxes. The text of the sugary drink tax states "the purpose of this ordinance is to tax the distribution of sugary drinks and the products used to make them" and "this Ordinance is not intended for the purpose of regulation". The text of the approved proposal should have been clear to the Cornell economists and the Cornell Chronicle that the tax was not intended to be placed on the consumer, and was not intended to deter consumers by raising prices. The tax leaves it up to the consumer to make their own choices, while raising awareness of health risk associated with sugary drinks. The ongoing debate regarding the tax gives consumer more information, while incentivizing companies to produce less sugary drinks and drinks with sugar alternatives. The deterrent, the cost of the tax, is placed on the distributor.

It is stated in the research paper that some Berkeley stores have raised prices of sodas and other sugary drinks. The paper presents the assumption that raised prices were the intended effect, and that only a few stores are matching up to the intent of the tax. This assumption is incorrect. While stores would be free to raise prices if they chose to, an increased cost of sugary drinks was not the purpose of the tax. The tax proposal placed the burden of the tax on distributors not the consumer. Although the tax did not forbid prices from being raised on sugary drinks, it was not the intention for prices to increase.

How did such a misunderstanding of the Berkeley tax on sugary drinks get used as the basis of a economics research paper at a major university, and how was such a misrepresentation not caught by editors at the Cornell Chronicle? "The Incidence of Taxes on Sugar-Sweetened Beverages: The Case of Berkeley, California" is behind a paywall, and it is not paying $5 for such muddled research. A preview of the paper is available, and from the thesis, it appears the authors didn't read the language of the Berkeley, didn't understand the tax, or chose to purposefully misrepresent the tax. The first two sentences of the paper read "One of the most commonly-proposed policies to address the high prevalence of obesity is a tax on energy-dense foods, in particular sugar-sweetened beverages (SSBs). This is based on the assumption that such taxes are largely passed through to consumers in the form of higher retail prices, leading to reduced consumption." If the authors read the language of the tax, which Berkeley residents voted on, they should have understood the tax was not written to raise prices on sugary drinks.

Academic research is often questioned for any ties to corporate or trade influence. It is not fair to accuse Frisvold or Cawley of having been influence by the American Beverage Association, or any lobbying group. There is not enough information to make any accusatory statements. But it would be fair to pose the question: How did two economics researchers end up misrepresenting the Berkeley sugary tax to such a degree? Purposeful or not, their research is now being cited by the American Beverage Association as evidence that a 'soda tax' does not work. The American Beverage Association challenged the sugary beverage tax, and campaigned against it during election season. The ABA knows what the language of the tax is, and knows that the Cornell research does not reflect the Berkeley initiative. But the ABA is trying to use the misleading research to their advantage. Right wing media sites are citing the research as well, using the article to attack progressive health politics. The Cornell economics study fits so well with the agenda of the ABA and of right wing political agenda, that it is fair to at least ask if there was any outside influence on the research. As other cities debate their own respective tax initiatives, the effects of the Berkeley initiative are being studied and cited.

The study out of Cornell University misrepresents the Berkeley tax on sugary drinks. The thesis of the two economics researchers is based on an inaccurate understanding of the Berkeley tax. The entire premise of the research paper is flawed. Coverage of the research paper in the Cornell Chronicle is inaccurate. Further coverage by various media outlets also inaccurately describes the Berkeley tax, following a shared false premise. [Note: Berkeley does have a committee overseeing the tax revenue on sugary drinks. It would help to clarify the facts if the committee, or someone acting on behalf of Berkeley city government, made a public statement regarding the Cornell study.]

The Berkeley tax did not "fall flat" and did not "fizzle". The Berkeley tax did not "fail". The tax did what is was intended to do. The tax raised awareness and revenue without raising prices at most stores. There was no clause in the language of the tax which called for higher prices at the register for sugary drinks. The tax was always designed to be a cost absorbed by distributors. The retail chain Dollar Tree removed regular sodas from their shelves. Dollar Tree didn't want to cover the costs of the tax, and couldn't work out a deal with the brands they stock to cover the costs. Dollar Tree was not willing to pass on the costs to their customers. The chain decided to focus on selling drinks with lower sugar content. The Cornell study is wrong, as is any article which unquestionably cites the study. People trying to understand the effects of the tax in Berkeley should disregard the Cornell research paper. Residents of Chicago who are currently debating a tax proposal should be made aware that the research cited in the Chicago Sun Times was based on an incorrect premise. The text of the Berkeley tax on sugary drinks is available online at various sources.