Revisiting an important Canadian natural experiment with new methods: an evaluation of the impact of the 1994 tax decrease on smoking
AbstractThe panel structure of the Survey on Smoking in Canada (1994-95) and novel methods are used to estimate the impact of an important decrease in the levels of taxation of cigarettes occurring in five out of the ten Canadian provinces that intended to eradicate black market sales of cigarettes in the spring of 1994. Given that black market sales have recently increased substantially because of new taxes, a complete and thorough analysis of the 1994 policy is of particular importance for policy makers. We revisit the issue with new econometric methods to address this evaluation problem as well as focus on particular sub-groups in the Canadian population. The large sample permits precise estimation of the impact of the policy by sub-group showing that females, young males, the poorly educated and separated or divorced individuals were particularly sensitive to these dramatic changes in cigarette prices. We also compute under realistic assumptions a price-elasticity for the probability of smoking and a lower bound on the price-elasticity for the quantities of cigarettes smoked.
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Bibliographic InfoPaper provided by Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number 14027.
Length: 25 pages
Date of creation: Mar 2014
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Cigarette; price-elasticity; difference in difference.;
Find related papers by JEL classification:
- D1 - Microeconomics - - Household Behavior
- E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- I1 - Health, Education, and Welfare - - Health
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-04-11 (All new papers)
- NEP-GER-2014-04-11 (German Papers)
- NEP-MAC-2014-04-11 (Macroeconomics)
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