Why the Soda Tax Makes Us Angry
Higher prices are bad. Being told what to do is worse.
In 1972, the residents of Miami lost their minds. That's how it seems, anyway, when you learn they were stockpiling laundry detergent. There was no shortage, but still they rushed to stores to grab as many boxes as they could, even purchased it from other counties. What turned all these people into clean freaks overnight?
Miami was one of the first cities in the country to ban the sale of detergents containing phosphates, chemicals that increased cleaning power but also increased the growth of algae when drained into the water supply. The algae could suffocate plants and animals and, in some cases, produce neurotoxins. The rule made a lot of sense, and it didn't cause any inconvenience because other equally effective additives such as carbonates were available. And yet, people went out of their way to procure the banned substance—even if it meant breaking the law to do so.
Like the rest of us, the Miami launderers didn't want to be told what not to do. We value our freedom of choice so highly that when it's threatened by an external authority, we automatically rebel in order to reassert control. We end up wanting whatever the authority says we're not supposed to want or have. Psychologist Jack Brehm coined the term reactance in the 1960s to describe this phenomenon, but we've long known the attraction of forbidden fruit. In one classic study of reactance,researchers placed signs in several of the restrooms of a university, either politely asking people not to write on the walls or ordering them, "Do NOT write on the walls!" How did people react to the latter? They were more inclined to write on the sign itself in defiance (e.g., "So what are you going to do about it … [expletive deleted] … You'll never catch me. Ha! Ha! Ha!"). Sometimes they skipped straight to stealing the sign. In other words, a minor prohibition elicited a major reaction—and what was true in the 1960s is just as true today.
It should come as no surprise, then, that we have a problem with "sin taxes," such as the penny-per-ounce surcharge on sweetened beverages championed by CDC Director Thomas Frieden. Most of us would probably agree that we'd be better off if we drank less soda, but any government action designed to control consumption puts us on alert. A tax is far less likely to induce reactance than an outright ban, but we feel queasy whenever we think The Man is trying to influence our behavior. In the case of the sugar-sweetened-beverage tax, which has often been referred to as a "fat tax," our discomfort is greater because the measure seems to encourage finger-pointing. In defense of the proposal, New York Gov. David Paterson has said, "Someone has got to contribute to the $7.6 billion the state spends every year to treat diseases from obesity."Those who are not obese may feel that they should not have to pay for the "sins" of the fat people over there, the ones creating the problem. Those who are obese are likely to feel shamed and persecuted. And we all recoil at the thought of the government trying to regulate our bodies.
Most scientific evidence suggests that an increase in price does lead to a decrease in consumption. For soda, it's estimated that a 10 percent markup would reduce intake by about 8 percent (PDF). (Assuming that a 12-pack of soda costs $5, a penny-per-ounce tax would raise its price by $1.44, or about 29 percent.) However, much of the research looks at the impact of higher price without taking into account that consumer response may vary depending on the reasons given for the markup. When the markup is presented specifically as a way to modify behavior, it is likely to elicit reactance and therefore be less effective. In the real world, people's desire to assert their freedom to drink soda may very well trump the disincentive of higher cost.
Sheena Iyengar is a professor at Columbia Business School and the author of The Art of Choosing.