The Impact of Fiscal Policy to Promote Healthy Diets: Evidence from the Navajo Nation

One of the most comprehensive fiscal policies to improve diet was adopted by the Navajo Nation; the Healthy Diné Nation Act (HDNA) of 2014-15 consists of two parts: 1) an exemption from sales tax for healthy foods and beverages; and 2) a tax increase on unhealthy foods and beverages. Together, they create a price wedge of 7-8% between healthy and unhealthy foods. We estimate difference-in-difference models and event studies that estimate the effect of the HDNA on a variety of health conditions relating to diet and weight for newborns and mothers which are recorded in birth certificate data. We find no evidence that the HDNA improved these outcomes; our estimates are precise enough to rule out improvements in gestational diabetes as large as those reported for U.S. city SSB taxes. Possible explanations for the null results include incomplete retailer implementation and cross-border shopping.