Why Understanding Smoking Bans Is Important For Estimating Their Effects: California'S Restaurant Smoking Bans And Restaurant Sales
Abstract"A large literature has sought to determine whether smoking bans help or hinder restaurants. Much of the literature improperly specifies its econometric equations and thus mistakenly infers causality. Examining the relationship between restaurant smoking bans and restaurant revenues in 267 California communities, we reach two main conclusions. First, California's municipal restaurant smoking bans are endogenous in a critical way-restaurant sales growth (or something correlated with restaurant sales growth) appears to cause restaurant bans, not vice versa. Consequently, failure to control properly for trends can produce spurious "evidence" of causation. Second, ban heterogeneity (e.g., state versus local) can be exploited to sort out-or rule out-causal effects. In other words, pooling data and treating smoking bans implemented at different levels as homogenous (as many studies do) ignores an important source of information and is likely to lead to erroneous conclusions. Our analysis holds lessons for the many studies that have examined the arguably more important question of how smoking bans affect smoking rates. "("JEL "L51) Copyright (c) 2008 Western Economic Association International.
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Bibliographic InfoArticle provided by Western Economic Association International in its journal Economic Inquiry.
Volume (Year): 46 (2008)
Issue (Month): 1 (01)
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- Gabriel M. Ahlfeldt & Wolfgang Maennig, 2010.
"Impact of Non-smoking Ordinances on Hospitality Revenues: The Case of Germany,"
Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik),
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Taylor & Francis Journals, vol. 44(35), pages 4539-4551, December.
- Michael Kvasnicka & Harald Tauchmann, 2010. "Much Ado About Nothing? – Smoking Bans and Germany’s Hospitality Industry," Ruhr Economic Papers 0172, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
- Dakshina G. De Silva & C F Elliott & R Simmons, 2013. "Restaurant wars," Working Papers 44312700, Lancaster University Management School, Economics Department.
- Thomas A. Garrett & Michael R. Pakko, 2009. "Casino revenue and the Illinois smoking ban," Working Papers 2009-027, Federal Reserve Bank of St. Louis.
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