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Prices and social behaviour: Evidence from adult smoking in Canadian Aboriginal communities

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  • Jesse A. Matheson

Abstract

This paper provides estimates of tobacco price elasticity explicitly distinguishing between two price effects: the direct effect, reflecting individual reaction to a price change, and the indirect effect, whereby price influences the individual by changing community smoking behaviour. Canada's Aboriginal communities are small and secluded, allowing for plausible identification of reference groups on a relatively large scale. Estimates suggest a 10% increase in price decreases daily smoking by 0.91 percentage points (2.11%), occasional smoking by 1.24 percentage points (8.27%) and average smoking intensity by 0.15 cigarettes per day (2.9%). It is found that the indirect effect almost doubles the response to a change in tobacco prices over the direct effect alone.

Suggested Citation

  • Jesse A. Matheson, 2015. "Prices and social behaviour: Evidence from adult smoking in Canadian Aboriginal communities," Canadian Journal of Economics, Canadian Economics Association, vol. 48(5), pages 1661-1693, December.
    • Handle: RePEc:cje:issued:v:48:y:2015:i:5:p:1661-1693
    DOI: 10.1111/caje.12176
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    Cited by:

    1. Anindya Sen, 2017. "Smokes, Smugglers and Lost Tax Revenues: How Governments Should Respond," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 471, February.

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    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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