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Why Understanding Smoking Bans Is Important For Estimating Their Effects: California'S Restaurant Smoking Bans And Restaurant Sales

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  • ROBERT K. FLECK
  • F. ANDREW HANSSEN

Abstract

"A large literature has sought to determine whether smoking bans help or hinder restaurants. Much of the literature improperly specifies its econometric equations and thus mistakenly infers causality. Examining the relationship between restaurant smoking bans and restaurant revenues in 267 California communities, we reach two main conclusions. First, California's municipal restaurant smoking bans are endogenous in a critical way-restaurant sales growth (or something correlated with restaurant sales growth) appears to cause restaurant bans, not vice versa. Consequently, failure to control properly for trends can produce spurious "evidence" of causation. Second, ban heterogeneity (e.g., state versus local) can be exploited to sort out-or rule out-causal effects. In other words, pooling data and treating smoking bans implemented at different levels as homogenous (as many studies do) ignores an important source of information and is likely to lead to erroneous conclusions. Our analysis holds lessons for the many studies that have examined the arguably more important question of how smoking bans affect smoking rates. "("JEL "L51) Copyright (c) 2008 Western Economic Association International.

Suggested Citation

  • Robert K. Fleck & F. Andrew Hanssen, 2008. "Why Understanding Smoking Bans Is Important For Estimating Their Effects: California'S Restaurant Smoking Bans And Restaurant Sales," Economic Inquiry, Western Economic Association International, vol. 46(1), pages 60-76, January.
  • Handle: RePEc:bla:ecinqu:v:46:y:2008:i:1:p:60-76
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    References listed on IDEAS

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    1. Besley, Timothy & Case, Anne, 2000. "Unnatural Experiments? Estimating the Incidence of Endogenous Policies," Economic Journal, Royal Economic Society, vol. 110(467), pages 672-694, November.
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    Cited by:

    1. Kvasnicka, Michael, 2010. "Public Smoking Bans, Youth Access Laws, and Cigarette Sales at Vending Machines," Ruhr Economic Papers 173, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    2. repec:zbw:rwimat:058 is not listed on IDEAS
    3. Kvasnicka, Michael & Tauchmann, Harald, 2010. "Eine Befragung von Gastronomiebetrieben zur Einführung von Rauchverboten: Deskriptive Ergebnisse," RWI Materialien 58, RWI - Leibniz-Institut für Wirtschaftsforschung.
    4. Bree L. Dority & Mary G. Mcgarvey & Eric C. Thompson & Jyothsna Sainath, 2013. "Local And Statewide Smoke-Free Laws In Nebraska: The Effects On Keno Establishments," Contemporary Economic Policy, Western Economic Association International, vol. 31(3), pages 549-564, July.
    5. Thomas A. Garrett & Michael R. Pakko, 2009. "Casino revenue and the Illinois smoking ban," Working Papers 2009-027, Federal Reserve Bank of St. Louis.
    6. Michael Kvasnicka & Harald Tauchmann, 2012. "Much ado about nothing? Smoking bans and Germany's hospitality industry," Applied Economics, Taylor & Francis Journals, vol. 44(35), pages 4539-4551, December.
    7. Ahlfeldt Gabriel M. & Maennig Wolfgang, 2010. "Impact of Non-smoking Ordinances on Hospitality Revenues: The Case of Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 230(5), pages 506-521, October.
    8. Tami Gurley-Calvez & George W. Hammond & Randall A. Childs, 2014. "Labor Market Impacts Of Smoking Regulations On The Restaurant Industry," Contemporary Economic Policy, Western Economic Association International, vol. 32(4), pages 681-694, October.
    9. Joshua Glonek, 2013. "The Economic Effect Of Banning Smoking In Wisconsin'S Bars And Restaurants," Contemporary Economic Policy, Western Economic Association International, vol. 31(3), pages 565-579, July.
    10. Michael Kvasnicka & Harald Tauchmann, 2010. "Krankenhaus Rating Report 2010 – Licht und Schatten – Executive Summary," RWI Materialien, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 21, 04.
    11. Leah K. Lakdawala & David Simon, 2016. "The Intergenerational Consequences of Tobacco Policy," Working papers 2016-27, University of Connecticut, Department of Economics.
    12. Michael Kvasnicka & Harald Tauchmann, 2010. "Much Ado About Nothing? – Smoking Bans and Germany’s Hospitality Industry," Ruhr Economic Papers 0172, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    13. Dakshina De Silva & Caroline Elliott & Robert Simmons, 2013. "Restaurant wars," Working Papers 44312700, Lancaster University Management School, Economics Department.
    14. repec:zbw:rwirep:0172 is not listed on IDEAS

    More about this item

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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