An Economic Model of Youth Smoking: Tax and Welfare Effects
AbstractThis 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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Bibliographic InfoPaper provided by EconWPA in its series HEW with number 0511003.
Length: 38 pages
Date of creation: 08 Nov 2005
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Cigarettes; smoking; addiction; Behavioral economics;
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 - - - Intertemporal Household Choice; Life Cycle Models and Saving
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-11-12 (All new papers)
- NEP-HEA-2005-11-12 (Health Economics)
- NEP-MIC-2005-11-12 (Microeconomics)
- NEP-UPT-2005-11-12 (Utility Models & Prospect Theory)
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