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An Economic Model of Youth Smoking: Tax and Welfare Effects

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  • Steven M. Suranovic

    (The George Washington University)

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://128.118.178.162/eps/hew/papers/0511/0511003.pdf
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Bibliographic 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://128.118.178.162

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Keywords: Cigarettes; smoking; addiction; Behavioral economics;

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References

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  1. 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.
  2. Gruber Jonathan H & Mullainathan Sendhil, 2005. "Do Cigarette Taxes Make Smokers Happier," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-45, July.
  3. Robert Goldfarb & Thomas Leonard & Steven Suranovic, 2001. "Are rival theories of smoking underdetermined?," Journal of Economic Methodology, Taylor & Francis Journals, vol. 8(2), pages 229-251.
  4. Jonathan Gruber, 2000. "Youth Smoking in the U.S.: Prices and Policies," NBER Working Papers 7506, National Bureau of Economic Research, Inc.
  5. 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.
  6. 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.
  7. Jonathan Gruber & Jonathan Zinman, 2000. "Youth Smoking in the U.S.: Evidence and Implications," NBER Working Papers 7780, National Bureau of Economic Research, Inc.
  8. Gary S. Becker & Kevin M. Murphy, 1986. "A Theory of Rational Addiction," University of Chicago - George G. Stigler Center for Study of Economy and State 41, Chicago - Center for Study of Economy and State.
  9. 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.
  10. Glied, Sherry, 2002. "Youth tobacco control: reconciling theory and empirical evidence," Journal of Health Economics, Elsevier, vol. 21(1), pages 117-135, January.
  11. Becker, Gary S & Grossman, Michael & Murphy, Kevin M, 1994. "An Empirical Analysis of Cigarette Addiction," American Economic Review, American Economic Association, vol. 84(3), pages 396-418, June.
  12. Goldbaum, David, 2000. "Life Cycle Consumption of a Harmful and Addictive Good," Economic Inquiry, Western Economic Association International, vol. 38(3), pages 458-69, July.
  13. Leonard, Thomas C. & Goldfarb, Robert S. & Suranovic, Steven M., 2000. "New on Paternalism and Public Policy," Economics and Philosophy, Cambridge University Press, vol. 16(02), pages 323-331, October.
  14. 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.
  15. Jonathan Gruber & Botond Koszegi, 2000. "Is Addiction "Rational"? Theory and Evidence," NBER Working Papers 7507, National Bureau of Economic Research, Inc.
  16. 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.
  17. 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.
  18. Ross, Hana PhD & Chaloupka, Frank J. PhD, 2001. "The Effect of Cigarette Prices on Youth Smoking," University of California at San Francisco, Center for Tobacco Control Research and Education qt8004m9n5, Center for Tobacco Control Research and Education, UC San Francisco.
  19. 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.
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Cited by:
  1. Grignon, Michel, 2009. "An empirical investigation of heterogeneity in time preferences and smoking behaviors," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(5), pages 739-751, October.

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