So they know the elasticity of demand for soda pop then, do they?

This is a very bold claim being made here.

The report by the two organisations says obesity is set to climb from 29% in 2015 to 34% in 2025. But their modelling suggests that the 5% increase could be avoided by a 20% tax on sugary drinks. They call for the introduction of a tax, alongside other measures.

Implicit in that calculation is that they know how the consumption of soda pop changes with changes in the price of soda pop. And that’s a very, very, strong claim to be making.

Every producer of everything in the world would love to know exactly what the elasticity of their product is. And we can make some good general guesses too. In the short term the demand (and supply too) of oil is inelastic which is why we get wild price swings. Cinema tickets rather more elastic. But we rarely do claim that we really know what the number is, rather than somewhere in the range. And we also really don’t claim to know the actual number for something as specific as soda pop.

The reason we don’t claim so? Because if it were easy enough to find out then every manufacturer of everything would be able to optimise their pricing systems. And we really don’t think that they do therefore we don’t think that it’s all that easy to find.

But, you know, maybe Cancer Research UK and the UK Health Forum really are employing economists who can do what Coca Cola, Pepsi and all the rest have been struggling to do for decades.

22 thoughts on “So they know the elasticity of demand for soda pop then, do they?”

  1. It’s the propaganda value of a precise number. Much more believable.

    The social do gooders all believe the end justifies the means and inaccurate and misleading ‘killer facts’ are fine as long as they propel the discussion in their direction. The morality of lying passes them by.

  2. Can’t this already be determined from current supermarket sales, they have BOGOF and price reduction offers on all the time, so surely it would be possible to monitor consumption in the same way?

  3. Their is no point in intellectual refutation of lying leftist shite. That will go over the heads of the masses –and delivering a steady diet of escalating deceit to those masses is what leftist lies aim to do.

    “YOU LYING LEFTIST CUNTS” are the kinds of headline needed to break the lies of the left in all areas. Real and well-deserved hatred coming through on the page against the scum wrecking Western society.

    Use “VERMIN” if there are enough prodnoses in the target audience to make “CUNTS” a counter-productive word.

  4. It’s just verbal noise. As Ecks said, there is no rational debate to be had with the Puritans. You must instead identify them, then exclude them from any position of influence.

  5. @ Runcie Balspune
    The bogof and other promotions will not determine the *long-term* affect of a price hike. Firstly because some people will stock up during a promotion so some sales are brought forward, increasing reported sales during the promotion without increasing total consumption. Secondly because a 20% price hike will move the product along the supply-demand curve into unknown territory.

  6. The Progressives seem to be going nuclear on this one. The BBC is insisting on having a bogus sugar panic story on its front page every day.

    And what has sugar got to do with Cancer Research?

  7. “Implicit in that calculation is that they know how the consumption of soda pop changes with changes in the price of soda pop. And that’s a very, very, strong claim to be making.”
    I think it is implicit that they are guessing.

  8. “And what has sugar got to do with Cancer Research?”

    Well ‘if’ sugar is toxic… It could be used as an anti tumour agent.

  9. I’m with Runcie Balspune on this one. A company the size of Coca-Cola has a pretty good idea what effect a 5p/can rise in prices would have on their sales.

    It’s very sensitive commercial information though. I’d be very surprised if they’d shared it with Cancer Research UK or the UK Health Forum.

  10. Around 15 years ago, I talked with a Coca-Cola manager after they had installed SAP. He told me that with SAP, he could get current 20 oz production data from China.

    Incredulous, I asked him, “What are you going to do with that information?”

    All the China plants need is for Atlanta to keep badgering them over production. Real time information will NOT be helpful.

    So, I confidently tell you that Coca-Cola has massive amounts of production and sales data. Past and present. They have no data from the future.

    ‘their modelling suggests’

    Uhhh . . . I can program a model to suggest anything you want it to suggest. If you process crap through a computer, it is still crap. Though the computer does make it official crap.

  11. I could write a computer model to suggest that I could run 100m in under ten seconds.

    Despite commuters being familiar for at least 30 years the public is still completely credulous when it comes to their use/abuse.

  12. Maybe CRUK are banking on getting a slice of the revenue this tax will raise. It’s fuck all to do with curing cancer, but who cares?

  13. I don’t drink soda pop. But in hot weather I like to combine dandelion and burdock syrup with fizzy water and ice for a refreshing long drink. As long as they leave my syrup alone the lying nut cases can do what they like to the tax on soda pop. Not my battle.

    Mind you, might not such a tax be regressive? In which case I might approve of it. The proles are grossly under-taxed.

  14. Bloke in Lower Hutt

    A policy wonk friend of mine did some research into the impacts of a sugar tax on obesity rates. She recommended against the tax because it targeted the wrong people. Turned out folks most at risk of becoming obese don’t drink sugary drinks anyway, hence the “large pizza and a Diet Coke for me” phenomenon witnessed in Dominos pizza ‘restaurants’ the world over.

  15. @ Rob
    “Despite commuters being familiar for at least 30 years the public is still completely credulous when it comes to their use/abuse.”
    Quite true. Actually I was a commuter 40+ years ago and we were regularly abused by ASLEF, which is why I chose to pay nearly half my net salary to rent a flat within walking distance of the office. But RMT still gets away with blackmailing Tfl and no-one breaks their windows or threatens the union’s executive and their families as the unions did to Ineos.
    OTOH 50 years ago I was a trainee/junior programmer during the long vacs so I apply commonsense and my sister’s standard reference GIGO (garbage in, garbage out).

  16. Even if the “soda” tax works exactly as claimed it won’t have any overall effect. People will simply start buying juice to get their fix.

    From my personal experience the most addictive “drugs” I have used are tobacco, sugar, caffeine, oxygen, then marijuana. In this case “drugs” are unnecessary substances that produce so sort of high. Oxygen is in the list because I once tried an oxygen bar. The effects were interesting. Opioids don’t make my list because, of the ones I’ve tried, I really didn’t like the high produced. If I wanted to sweat to death for mild pain relief being sat on by a sumo is preferable to oxycodone.

  17. I don’t know a lot about many things, but I know a great deal about price elasticities, because for over a decade I worked with some VERY smart people from MIT, Northwestern U in Chicago and Harvard to build predictive models for supermarket chains (who control the final price of products; Coca-Cola and Frito-Lay have bugger all say in the matter).

    ALL our models were based on using history to predict “yesterday” — any failure to do so meant the model was broken, and couldn’t be used to predict the future. At least two years was spent examining our models’ predictions against reality, and trying to figure out why they all, without exception, failed — and this was using sales data in amounts that regularly choked the universities’ mainframes.

    Finally, we agreed that the models’ output would form the basis for “educated guesswork” — and this for models that were proven to be 95% accurate, most of the time — because some would work spectacularly well a few times, then be embarrassingly inaccurate the next couple of times, with no change in data quality.

    So for some quango or interest group to claim confidence in their predictive model… well, it is, as they say, to laugh. The problem is that these ticks sound so plausible, especially to people (e.g. politicians) who have absolutely no fucking clue about the topic.

    Better to ignore them; better still to start executing them if their models fail. Perhaps then they’d be more careful in the future. In terms of life-changing policy, “oops” is not a satisfactory comment.

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