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An Economic Model of Youth Smoking: Tax and Welfare Effects

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Author Info
Steven M. Suranovic (The George Washington University)

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Abstract

This paper presents a model of smoking choice in which rationality is bounded by limitations in intertemporal computational abilities. The model is applied to the youth decision to initiate smoking. Lifetime smoking paths of representative smokers indicate that youths may experience a reduction in lifetime utility and come to regret their decision to smoke. It is suggested that public policy interventions that raise the near term cost of smoking will be more effective in reducing lifetime smoking than informational campaigns that emphasize future health costs. However, youth taxes would have to be quite high to substantially reduce smoking rates among youths who have already begun to smoke. Also, low youth taxes would not prevent future smoking as an adult, although they would reduce smoking rates and lead to earlier quitting.

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File URL: http://129.3.20.41/eps/hew/papers/0511/0511003.pdf
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Publisher Info
Paper provided by EconWPA in its series HEW with number 0511003.

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Length: 38 pages
Date of creation: 08 Nov 2005
Date of revision:
Handle: RePEc:wpa:wuwphe:0511003

Note: Type of Document - pdf; pages: 38
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Web page: http://129.3.20.41

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Related research
Keywords: Cigarettes; smoking; addiction; Behavioral economics;

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Find related papers by JEL classification:
I12 - Health, Education, and Welfare - - Health - - - Health Production
D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
D60 - Microeconomics - - Welfare Economics - - - General
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving

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  1. Emery, Sherry & White, Martha M. & Pierce, John P., 2001. "Does cigarette price influence adolescent experimentation?," Journal of Health Economics, Elsevier, vol. 20(2), pages 261-270, March. [Downloadable!] (restricted)
  2. Jonathan Gruber & Jonathan Zinman, 2000. "Youth Smoking in the U.S.: Evidence and Implications," NBER Working Papers 7780, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Antonanzas, Fernando, et al, 2000. " Smoking Risks in Spain: Part I--Perception of Risks to the Smoker," Journal of Risk and Uncertainty, Springer, vol. 21(2-3), pages 161-86, November. [Downloadable!] (restricted)
  4. Goldbaum, David, 2000. "Life Cycle Consumption of a Harmful and Addictive Good," Economic Inquiry, Oxford University Press, vol. 38(3), pages 458-69, July.
  5. William N. Evans & Jeanne S. Ringel & Diana Stech, 1999. "Tobacco Taxes and Public Policy to Discourage Smoking," NBER Chapters, in: Tax Policy and the Economy, volume 13, pages 1-56 National Bureau of Economic Research, Inc. [Downloadable!]
  6. Jonathan Gruber & Botond Koszegi, 2000. "Is Addiction "Rational"? Theory and Evidence," NBER Working Papers 7507, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Jonathan Gruber & Botond Köszegi, 2001. "Is Addiction "Rational"? Theory And Evidence," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1261-1303, November. [Downloadable!] (restricted)
  8. Glied, Sherry, 2002. "Youth tobacco control: reconciling theory and empirical evidence," Journal of Health Economics, Elsevier, vol. 21(1), pages 117-135, January. [Downloadable!] (restricted)
  9. Hana Ross & Frank J. Chaloupka, 2003. "The effect of cigarette prices on youth smoking," Health Economics, John Wiley & Sons, Ltd., vol. 12(3), pages 217-230. [Downloadable!]
  10. Gary S. Becker & Michael Grossman & Kevin M. Murphy, 1994. "An Empirical Analysis of Cigarette Addiction," NBER Working Papers 3322, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. M. Christopher Auld, 2005. "Causal effect of early initiation on adolescent smoking patterns," Canadian Journal of Economics, Canadian Economics Association, vol. 38(3), pages 709-734, August. [Downloadable!] (restricted)
  12. John A. Tauras & Frank J. Chaloupka, 1999. "Determinants of Smoking Cessation: An Analysis of Young Adult Men and Women," NBER Working Papers 7262, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  13. Jonathan Gruber, 2000. "Youth Smoking in the U.S.: Prices and Policies," NBER Working Papers 7506, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  14. Robert S. Goldfarb, Thomas C. Leonard, Steven M. Suranovic, 2001. "Are rival theories of smoking underdetermined?," Journal of Economic Methodology, Taylor and Francis Journals, vol. 8(2), pages 229-251, June. [Downloadable!] (restricted)
  15. Suranovic, Steven M. & Goldfarb, Robert S. & Leonard, Thomas C., 1999. "An economic theory of cigarette addiction," Journal of Health Economics, Elsevier, vol. 18(1), pages 1-29, January. [Downloadable!] (restricted)
  16. Becker, Gary S & Mulligan, Casey B, 1997. "The Endogenous Determination of Time Preference," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 729-58, August.
  17. Jonathan Gruber & Sendhil Mullainathan, 2002. "Do Cigarette Taxes Make Smokers Happier?," NBER Working Papers 8872, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  18. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 675-700, August. [Downloadable!] (restricted)
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