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The effect of cigarette taxes on cigarette consumption

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  • Showalter, M.H.

Abstract

Objectives. This paper reexamines the work of Meier and Licari in a previous issue of the Journal. Methods. The impact of excise taxes on cigarette consumption and sales was measured via standard regression analysis. Results. The 1983 federal tax increase is shown to have an anomalous effect on the regression results. When those data are excluded, there is no significant difference between state and federal tax increases. Further investigation suggests that firms raised cigarette prices substantially in the years surrounding the 1983 federal tax increase, which accounts for the relatively large decrease in consumption during this period. Conclusions. Federal excise taxes per se do not appear to be more effective than state excise taxes in terms of reducing cigarette consumption. The reaction of cigarette firms to government policies appears to be an important determinant of the success of antismoking initiatives.

Suggested Citation

  • Showalter, M.H., 1998. "The effect of cigarette taxes on cigarette consumption," American Journal of Public Health, American Public Health Association, vol. 88(7), pages 1118-1119.
    • Handle: RePEc:aph:ajpbhl:1998:88:7:1118-1119_2
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    Cited by:

    1. Carmen Jan & Marcos Lee & Reina Roa & Víctor Herrera & Michael Politis & Jorge Motta, 2014. "The Association of Tobacco Control Policies and the Risk of Acute Myocardial Infarction Using Hospital Admissions Data," PLOS ONE, Public Library of Science, vol. 9(2), pages 1-6, February.
    2. Nicholas Apergis & Rajeev Goel & James Payne, 2014. "Dynamics of U.S. State Cigarette Consumption: Evidence from Panel Error Correction Modeling," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 42(1), pages 3-20, March.
    3. Richard Cebula & Maggie Foley & Robert Houmes, 2014. "Empirical analysis of the impact of cigarette excise taxes on cigarette consumption: estimates from recent state-level data," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 38(1), pages 164-180, January.
    4. Fage Bradley & Vasilev Aleksandar, 2021. "Understanding the Effect of a Soft Drinks Industry Levy on Consumer Well-Being in the UK: First Estimates," Economics, Sciendo, vol. 9(1), pages 25-42, June.
    5. Reiner Hanewinkel & Christian Radden & Tobias Rosenkranz, 2008. "Price increase causes fewer sales of factory‐made cigarettes and higher sales of cheaper loose tobacco in Germany," Health Economics, John Wiley & Sons, Ltd., vol. 17(6), pages 683-693, June.
    6. Richard J. Cebula & Fabrizio Rossi, 2015. "Does the Presence of Very Young Children and/or Older Minor-aged Children in the Home Reduce Cigarette Smoking? Panel Data Evidence for the United States," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 9(4), pages 430-441, November.
    7. Cebula, Richard, 2010. "A Preliminary Contemporary Panel Data Analysis of the Consumption Impact of Cigarette Taxation," MPRA Paper 49201, University Library of Munich, Germany.
    8. Showalter, Mark H., 1999. "Firm behavior in a market with addiction: the case of cigarettes," Journal of Health Economics, Elsevier, vol. 18(4), pages 409-427, August.

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