Consumption Responses to an Unpopular Policy: Evidence from a Short-Lived Soda Tax.

This article examines how consumer opposition to a soda tax influences their consumption response, focusing on the short-lived 2010 Washington state soda tax, which was repealed by popular ballot. Using precinct-level voting data combined with grocery store sales and shopper location data, the study finds that stores frequented by tax opponents experienced a 53% larger reduction in soda purchases compared to stores frequented by supporters, despite uniform tax pass-through to prices. The analysis rules out alternative explanations such as differential pricing, substitution effects, or advertising exposure, and supports a behavioral mechanism whereby consumers who disagree with the tax reduce consumption more sharply as a form of rebellion to avoid the tax burden. The findings suggest that ignoring consumer opposition when setting tax rates may lead to overestimating optimal tax levels and expected revenues, highlighting the importance of accounting for heterogeneous behavioral responses in tax policy design.