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Putting Out The Fires: Will Higher Taxes Reduce Youth Smoking?

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Author Info
DeCicca, Philip (Department of Policy Analysis & Management)
Kenkel, Donald () (Department of Policy Analysis & Management)
Mathios, Alan () (Department of Policy Analysis & Management)

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Abstract

This paper re-examines the empirical support for predictions that proposed cigarette tax or price increases will substantially reduce youth smoking. Part of the support for these predictions comes from evidence that higher taxes reduce aggregate tobacco sales and adult smoking rates. But taxes may have much different impacts on youth starting behavior than on adult quitting behavior. We use a panel microdata set, the National Education Longitudinal Survey of 1988 (NELS:88), that spans a period when many states increased taxes on cigarettes.We are able to study the impact of taxes and prices on smoking behavior during exactly the period in adolescence when most smokers start their habits. Cross-sectional models of 12th grade smoking based on the NELS:88 data yield estimated price elasticities ranging from -0.29 to -0.98,similar to previous studies. But when we exploit the longitudinal nature of the data our results suggest that cigarette taxes or prices are not important determinants of smoking initiation. We find weak or nonexistent tax and price effects in models of the onset of smoking between 8th and 12th grade, models of the onset into heavy smoking between 8th and 12th grade, and discrete time hazard models that include state fixed effects. Our estimates create doubt about the strength of the response of youth smoking to higher taxes or prices, and suggest that alternative policy approaches to preventing youth smoking deserve serious attention. We also provide a new perspective on the relationship between smoking and schooling. We find that students with better tests scores are less likely to smoke, and that eventual dropouts are already more likely to smoke in 8th grade. Possible explanations for these patterns include individual heterogeneity in: the rate of time preference; tastes for deviancy; parental investment in smoking prevention as an aspect of child quality; and optimal lifetime plans for health and education human capital investment.

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Publisher Info
Paper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number 00-3.

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Length: 46 pages
Date of creation: 01 Jan 2000
Date of revision:
Handle: RePEc:hhs:aareco:2000_003

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Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
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Related research
Keywords: Cigarette smoking; taxation;

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Find related papers by JEL classification:
D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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.:

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    Other versions:
  4. Frank J. Chaloupka & Rosalie Liccardo Pacula, 1998. "An Examination of Gender and Race Differences in Youth Smoking Responsiveness to Price and Tobacco Control Policies," NBER Working Papers 6541, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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    Other versions:
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    Other versions:
  13. Douglas, Stratford, 1998. "The Duration of the Smoking Habit," Economic Inquiry, Oxford University Press, vol. 36(1), pages 49-64, January.
  14. Frank J. Chaloupka & Michael Grossman, 1996. "Price, Tobacco Control Policies and Youth Smoking," NBER Working Papers 5740, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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    Other versions:
  17. Kenkel, Donald S, 1991. "Health Behavior, Health Knowledge, and Schooling," Journal of Political Economy, University of Chicago Press, vol. 99(2), pages 287-305, April. [Downloadable!] (restricted)
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  18. Stewart, Mark B, 1983. "On Least Squares Estimation When the Dependent Variable Is Grouped," Review of Economic Studies, Blackwell Publishing, vol. 50(4), pages 737-53, October. [Downloadable!] (restricted)
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  19. Chaloupka, Frank J. & Wechsler, Henry, 1997. "Price, tobacco control policies and smoking among young adults," Journal of Health Economics, Elsevier, vol. 16(3), pages 359-373, June. [Downloadable!] (restricted)
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  20. Lewit, Eugene M. & Coate, Douglas, 1982. "The potential for using excise taxes to reduce smoking," Journal of Health Economics, Elsevier, vol. 1(2), pages 121-145, August. [Downloadable!] (restricted)
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  22. Douglas, Stratford & Hariharan, Govind, 1994. "The hazard of starting smoking: Estimates from a split population duration model," Journal of Health Economics, Elsevier, vol. 13(2), pages 213-230, July. [Downloadable!] (restricted)
Full references

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. David M. Cutler & Jonathan Gruber & Raymond S. Hartman & M.B. Landrum, J. Newhouse & Meredith B. Rosenthal, 2000. "The Economic Impacts of the Tobacco Settlement," NBER Working Papers 7760, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. John A. Tauras & Patrick M. O'Malley & Lloyd D. Johnston, 2001. "Effects of Price and Access Laws on Teenage Smoking Initiation: A National Longitudinal Analysis," NBER Working Papers 8331, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. John Cawley & Sara Markowitz & John Tauras, 2006. "Obesity, Cigarette Prices, Youth Access Laws, and Adolescent Smoking Initiation," Eastern Economic Journal, Eastern Economic Association, vol. 32(1), pages 149-170, Winter. [Downloadable!]
  4. Jonathan Gruber, 2001. "Tobacco at the Crossroads: The Past and Future of Smoking Regulation in the United States," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 193-212, Spring. [Downloadable!] (restricted)
  5. John A. Tauras, 1999. "The Transition to Smoking Cessation: Evidence from Multiple Failure Duration Analysis," NBER Working Papers 7412, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Sheryl Magzamen & Stanton Glantz, 2003. "Analysis of Proposition 28: Repeal of Proposition 10 Tobacco Surtax Initiative Statute," University of California at San Francisco, Center for Tobacco Control Research and Education 1024, Center for Tobacco Control Research and Education, UC San Francisco. [Downloadable!]
  7. Silja Göhlmann, 2007. "The Determinants of Smoking Initiation - Empirical Evidence for Germany," Ruhr Economic Papers 0027, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen. [Downloadable!]
  8. Silja Göhlmann, 2007. "The Determinants of Smoking Initiation: Empirical Evidence for Germany," SOEPpapers 62, DIW Berlin, The German Socio-Economic Panel (SOEP). [Downloadable!]
  9. Bulow, Jeremy I & Klemperer, Paul, 1999. "The Tobacco Deal," CEPR Discussion Papers 2125, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  10. Hana Ross & Frank J. Chaloupka & Melanie Wakefield, 2006. "Youth Smoking Uptake Progress: Price and Public Policy Effects," Eastern Economic Journal, Eastern Economic Association, vol. 32(2), pages 355-367, Spring. [Downloadable!]
  11. Naci Mocan & Erdal Tekin & Lan Liang, . "Do Adolescents with Emotional or Behavioral Problems Respond to Cigarette Prices?," Departmental Working Papers 2008-06, Department of Economics, Louisiana State University. [Downloadable!]
  12. John Cawley & Sara Markowitz & John Tauras, 2003. "Lighting Up and Slimming Down: The Effects of Body Weight and Cigarette Prices on Adolescent Smoking Initiation," NBER Working Papers 9561, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  13. Jeffrey E. Harris & Sandra W. Chan, 1999. "The continuum-of-addiction: cigarette smoking in relation to price among Americans aged 15-29," Health Economics, John Wiley & Sons, Ltd., vol. 8(1), pages 81-86.
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