Making Costs Visible: Experimental Evidence on Tax Salience, Health Warnings, and Sugar-Sweetened Beverage Choice in India

Abstract

Sugar-sweetened beverage (SSB) policies typically seek to influence consumption through taxation or health information, yet their effectiveness may depend not only on the information provided but also on how prominently it is presented. This study examines whether making financial and health costs more salient influences consumer responses to SSBs in India. A within-subject experiment involving 120 respondents presented the same beverage at a constant final price under four conditions: standard MRP, explicit disclosure of 40% GST, a “HIGH IN SUGAR” warning, and a combination of GST disclosure and the health warning. The findings show that both explicit tax disclosure and the health warning significantly reduced purchase likelihood despite no change in the product or final price, with the combined presentation producing the largest reduction. The two interventions also operated differently: GST disclosure influenced purchase intentions without significantly altering perceived healthiness, whereas the health warning reduced both purchase likelihood and perceived healthiness. Most notably, respondents reported little conscious importance for GST information despite responding significantly when the tax was made explicit, revealing a divergence between stated preferences and experimental responses. The findings highlight salience as an important dimension of consumer decision-making and suggest that making financial and health costs visible at the point of choice may strengthen the effectiveness of SSB taxation and front-of-pack labelling policies in India.