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Do Higher Tobacco Taxes Reduce Adult Smoking? New Evidence Of The Effect Of Recent Cigarette Tax Increases On Adult Smoking

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  • KEVIN CALLISON
  • ROBERT KAESTNER

Abstract

There is a general consensus among policymakers that raising tobacco taxes reduces cigarette consumption. However, evidence that tobacco taxes reduce adult smoking is relatively sparse. In this paper, we extend the literature in two ways: using data from the Current Population Survey Tobacco Use Supplements we focus on recent, large tax changes, which provide the best opportunity to empirically observe a response in cigarette consumption, and employ a novel paired difference-in-differences technique to estimate the association between tax increases and cigarette consumption. Estimates indicate that, for adults, the association between cigarette taxes and either smoking participation or smoking intensity is negative, small and not usually statistically significant. Our evidence suggests that increases in cigarette taxes are associated with small decreases in cigarette consumption and that it will take sizable tax increases, on the order of 100%, to decrease adult smoking by as much as 5%.

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Bibliographic Info

Article provided by Western Economic Association International in its journal Economic Inquiry.

Volume (Year): 52 (2014)
Issue (Month): 1 (01)
Pages: 155-172

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Handle: RePEc:bla:ecinqu:v:52:y:2014:i:1:p:155-172

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Cited by:
  1. David Simon, 2013. "Does Early Life Exposure to Cigarette Smoke Permanently Harm Childhood Health? Evidence from Cigarette Tax Hikes," Working papers, University of Connecticut, Department of Economics 2013-21, University of Connecticut, Department of Economics.
  2. Liberati, Paolo & Paradiso, Massimo, 2014. "Sulla composizione dell'accisa sui tabacchi: un'ipotesi di modifica del sistema di tassazione in Italia
    [On the structure of the excise taxes on tobacco: A reform proposal for Italy]
    ," MPRA Paper 55906, University Library of Munich, Germany.

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