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Impact of Non-Smoking Ordinances on Hospitality Revenues: The Case of Germany

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Author Info
Gabriel Ahlfeldt () (Chair for Economic Policy, University of Hamburg)
Wolfgang Maennig () (Chair for Economic Policy, University of Hamburg)

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Abstract

Non-smoking ordinances are among the most popular albeit controversial public health-care legislations worldwide. This article provides an empirical assessment of the impact of non-smoking ordinances on bar and restaurant revenues in German Federal States. By application of panel spline regression and difference-in-difference strategies, we find negative impact limited to bars in the very short run. If any, there is a positive impact on total expenditures in the long run, indicating that either consumption pattern has not changed at all or that any reduction in spending by smokers is compensated for by a corresponding increase by non-smokers. These findings support the German – and similar – non-smoking legislations in the sense that positive externalities resulting from reduced health care cost are likely to outweigh the risk to businesses in the hospitality sector, at least in the long run.

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File URL: http://www.hced.uni-hamburg.de/WorkingPapers/HCED-026.pdf
File Format: application/pdf
File Function: First version, 2009
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Publisher Info
Paper provided by Chair for Economic Policy, University of Hamburg in its series Working Papers with number 026.

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Length: 16 pages
Date of creation: 2009
Date of revision:
Publication status: Published in Hamburg Contemporary Economic Discussions, Issue 26, 2009
Handle: RePEc:hce:wpaper:026

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Postal: Von-Melle-Park 5 D-20146 Hamburg
Web page: http://www.hced.uni-hamburg.de/
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For technical questions regarding this item, or to correct its listing, contact: (Gabriel Ahlfeldt).

Related research
Keywords: Keywords: Bar Revenues; Non-smoking Ordinances; Restaurant Revenues;

Find related papers by JEL classification:
I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
K32 - Law and Economics - - Other Substantive Areas of Law - - - Environmental, Health, and Safety Law

This paper has been announced in the following NEP Reports:

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. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-75, June. [Downloadable!] (restricted)
  2. repec:bep:eapcon:v:7:y:2007:i:1:p:1628-1628 is not listed on IDEAS
  3. Stephen J. Redding & Daniel M. Sturm, 2008. "The Costs of Remoteness: Evidence from German Division and Reunification," American Economic Review, American Economic Association, vol. 98(5), pages 1766-97, December. [Downloadable!]
    Other versions:
  4. Benjamin C. Alamar & Stanton A. Glantz, 2004. "Smoke-free Ordinances Increase Restaurant Profit and Value," Contemporary Economic Policy, Western Economic Association International, vol. 22(4), pages 520-525, October. [Downloadable!] (restricted)
  5. Michael R. Pakko, 2006. "On the economic analysis of smoking bans," Regional Economic Development, Federal Reserve Bank of St. Louis, issue Oct, pages 115-130. [Downloadable!]
  6. David W. Cowling & Philip Bond, 2005. "Smoke-free laws and bar revenues in California - the last call," Health Economics, John Wiley & Sons, Ltd., vol. 14(12), pages 1273-1281. [Downloadable!]
  7. Robert K. Fleck & F. Andrew Hanssen, 2008. "Why Understanding Smoking Bans Is Important For Estimating Their Effects: California'S Restaurant Smoking Bans And Restaurant Sales," Economic Inquiry, Western Economic Association International, vol. 46(1), pages 60-76, 01. [Downloadable!] (restricted)
  8. Benjamin Parker & Eric Chiang, 2007. "Addressing the revenue impact of smoking ordinances," Applied Economics Letters, Taylor and Francis Journals, vol. 14(12), pages 871-875. [Downloadable!] (restricted)
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