Tobacco Use, Taxation and Self Control in Adolescence
AbstractRecent literature has suggested that higher taxes on addictive goods could increase welfare by assisting individuals with self control problems and trouble resisting 'temptation’. In contrast, if individuals continue to use despite increased prices, taxation may serve to reduce the welfare of these individuals while providing no benefits in managing self control nor mitigating externalities. We use data on adolescents from the National Longitudinal Study of Adolescent Health (Add Health) to examine the impact of tobacco taxes on smoking. To account for unobserved heterogeneity in response to taxes we estimate finite mixture models, positing two types of individuals with differential responses to taxes. We find evidence of differential price elasticity for tobacco use across the adolescents groups, and show that individuals with low self control or high discount rates are largely unresponsive to cigarette price. Those who have the least willpower may need the most help in quitting but are unresponsive to taxes, suggesting that policies other than taxation may be needed to reduce adolescent tobacco use.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15130.
Date of creation: Jul 2009
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Note: AG HE
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- H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
- I0 - Health, Education, and Welfare - - General
- I1 - Health, Education, and Welfare - - Health
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-07-11 (All new papers)
- NEP-HEA-2009-07-11 (Health Economics)
- NEP-PUB-2009-07-11 (Public Finance)
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- Marti, Joachim, 2012. "A bestâ€“worst scaling survey of adolescents' level of concern for health and non-health consequences of smoking," Social Science & Medicine, Elsevier, Elsevier, vol. 75(1), pages 87-97.
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- Ian Irvine & William Sims, 2012. "A Taxing Dilemma: Assessing the Impact of Tax and Price Changes on the Tobacco Market," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 350, May.
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