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Cigarettes and addiction information: simulating the demand effects of the tobacco industry's 'conspiracy of silence'

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Author Info
Aju J. Fenn
John R. Schroeter

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Abstract

Although cigarette manufacturers were aware of the addictive properties of nicotine as early as 1962, the information did not become available to the US public until 1979 when the Surgeon General disclosed it ( US Department of Health, Education, and Welfare, 1979 ). This study simulates the impact this information would have had on the demand for cigarettes had it been released in 1962. The simulations build on past work by Fenn et al . (2001) who found evidence that the release of addiction information resulted in a structural shift in demand in 1979. In the present study, the econometric results from Fenn et al . (2001) are used to compute simulated time paths for state-level per capita consumption under the hypothetical scenario involving the earlier release of the addiction information. Using these simulated consumption paths; the projected reductions in cigarette sales revenue are calculated. These dollar figures provide a benchmark against which to judge the compensation amounts that the industry must pay because of recent tobacco lawsuit settlements.

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Publisher Info
Article provided by Taylor and Francis Journals in its journal Applied Economics.

Volume (Year): 36 (2004)
Issue (Month): 19 (September)
Pages: 2151-2159
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Handle: RePEc:taf:applec:v:36:y:2004:i:19:p:2151-2159

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Baltagi, Badi H & Griffin, James M, 2001. "The Econometrics of Rational Addiction: The Case of Cigarettes," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(4), pages 449-54, October.
  2. Gallet, Craig & Agarwal, Rajshree, 1999. "The Gradual Response of Cigarette Demand to Health Information," Bulletin of Economic Research, Blackwell Publishing, vol. 51(3), pages 259-65, July.
  3. Baltagi, Badi H & Levin, Dan, 1986. "Estimating Dynamic Demand for Cigarettes Using Panel Data: The Effects of Bootlegging, Taxation and Advertising Reconsidered," The Review of Economics and Statistics, MIT Press, vol. 68(1), pages 148-55, February. [Downloadable!] (restricted)
  4. Barnett, Paul G. & Keeler, Theodore E. & Hu, Teh-wei, 1995. "Oligopoly structure and the incidence of cigarette excise taxes," Journal of Public Economics, Elsevier, vol. 57(3), pages 457-470, July. [Downloadable!] (restricted)
  5. Blaine, Thomas W. & Reed, Michael R., 1994. "U.S. Cigarette Smoking And Health Warnings: New Evidence From Post World War Ii Data," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 26(02), December. [Downloadable!]
  6. Fenn, Aju J. & Antonovitz, Frances & Schroeter, John R., 2001. "Cigarettes and addiction information: new evidence in support of the rational addiction model," Economics Letters, Elsevier, vol. 72(1), pages 39-45, July. [Downloadable!] (restricted)
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  7. Auld, M. Christopher & Grootendorst, Paul, 2004. "An empirical analysis of milk addiction," Journal of Health Economics, Elsevier, vol. 23(6), pages 1117-1133, November. [Downloadable!] (restricted)
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  8. Gary S. Becker & Michael Grossman & Kevin M. Murphy, 1990. "An Empirical Analysis of Cigarette Addiction," University of Chicago - George G. Stigler Center for Study of Economy and State 61, Chicago - Center for Study of Economy and State.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Moro, Daniele, 2008. "Market And Policy Issues In Micro-Econometric Demand Modeling," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6500, European Association of Agricultural Economists. [Downloadable!]
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