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Chicago Is Making a Case for a Tax on Plastic Bags

New research shows that an added charge is nudging consumer habits.

A man carries plastic bags filled with food through the snow.
Will a seven-cent tax curb plastic bag usage at grocery stores and delis? (Yorgos Karahalis/Reuters)

Often, consumers’ choices are shaped around “loss aversion,” which holds that people experience a loss more sharply than they do a gain. In Chicago, this could translate to a pretty significant reduction in the use of disposable plastic bags, according to a new study led by Professor Tatiana A. Homonoff of New York University.

In February, Chicago implemented a tax on disposable carryout bags. Now, consumers pay seven cents each time they ask for one. According to the study, the city has already recorded a drop in plastic bag usage. While the data—commissioned by the city in partnership with ideas42 and the University of Chicago’s Energy and Environment Lab—only stretches one month after the tax was implemented, the results show a shift in consumer behavior.

Before the tax was in effect, 82 percent of the 14,168 customers in the study used at least one disposable bag per shopping trip. Once the extra charge was added, only 49 percent said they had opted to go with a disposable bag—a decrease of 33 percent in that first month. Meanwhile, reusable bag usage increased 20 percent after the tax was added. Research suggests that a financial reward for bringing a reusable bag wouldn’t be as persuasive as a fee for asking for plastic. “People alter their habits more when they’re losing money than when they’re gaining it,” Homonoff explains.

(Courtesy of ideas42)
(Courtesy of ideas42)

Four other U.S. cities—Washington, D.C., Los Angeles, San Francisco, and Seattle—have also passed policies that slap taxes on grocery bags. Homonoff has also studied the bag tax in D.C., which was the first to pass the policy in 2010, and notes that the response there was similar to Chicago. “Once implemented, we saw a sharp decrease,” she says, “with no big rebound jump—after a drop in disposable bag use, it leveled out and remained low.” The tax in Chicago is still fairly new, and Homonoff says there will be follow-up studies.

Over the past few years, various American cities have either expelled plastic bags or have repealed existing bans on them. While reducing our plastic bag footprint will help prevent these from entering the waste stream, proposed restrictions have often been met with considerable opposition. In 2007, for instance, a Maryland lobbyist claimed that a bag tax was essentially “un-American,” as it would take choices away from consumers.

A similar controversy arose over taxes on items like soda, for example, which have also been criticized for disproportionately affecting low-income communities, who tend to buy more soda. Could the bag tax be a particular worry for vulnerable communities? “Different cities have crafted policies that address this concern and have aimed to make the burden on low-income populations as limited as possible,” Homonoff says. For example, the policies in Chicago, Los Angeles, and San Francisco exempt residents who use food stamps (SNAP or WIC) from paying tax on plastic bags. “The next step should also involve efforts to make reusable bags more accessible in these communities,” she adds.

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