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Price Elasticity of the Demand for Cigarettes in the United States

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  • Herbert L. Lyon
  • Julian L. Simon

Abstract

The retail price elasticity of demand for cigarettes is a particularly important parameter for social decisions at this time. Results from prior cigarette elasticity studies vary widely, ranging from −0.10 to −1.48. Temporal changes may explain some of this variation, but differences in research methods are more important. The quasi-experimental approach used in this article yields an elasticity estimate (−0.511) free of many of the extraneous and irrelevant systematic influences that afflict time-series and cross-section methods. In addition, the length of run of the elasticity is known and explicit. The method provides built-in protections against bias from trends in collinear variables and produces sensible estimates with reasonably small and measurable dispersion.

Suggested Citation

  • Herbert L. Lyon & Julian L. Simon, 1968. "Price Elasticity of the Demand for Cigarettes in the United States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 50(4), pages 888-895.
  • Handle: RePEc:oup:ajagec:v:50:y:1968:i:4:p:888-895.
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    File URL: http://hdl.handle.net/10.2307/1237626
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    Cited by:

    1. Duleep, Harriet & Liu, Xingfei, 2016. "Estimating More Precise Treatment Effects in Natural and Actual Experiments," IZA Discussion Papers 10055, Institute of Labor Economics (IZA).
    2. Escañuela Romana, Ignacio, 2018. "La elasticidad precio de la demanda de transporte aéreo de pasajeros en los Estados Unidos
      [The price elasticity of demand for air travel in the United States]
      ," MPRA Paper 83572, University Library of Munich, Germany.
    3. David M. Cutler & Edward L. Glaeser, 2009. "Why Do Europeans Smoke More than Americans?," NBER Chapters, in: Developments in the Economics of Aging, pages 255-282, National Bureau of Economic Research, Inc.
    4. Hayami, Yujiro & Peterson, Willis L., 1970. "Social Returns To Public Information Services: The Case Of Statistical Reporting Of U.S. Farm Commodities," Staff Papers 13711, University of Minnesota, Department of Applied Economics.
    5. Duleep, Harriet, 2012. "Sharpening the Effectiveness of Natural Experiments as an Analytical Tool," IZA Discussion Papers 6682, Institute of Labor Economics (IZA).
    6. Julian Simon & David Simon, 1996. "The effects of regulations on state liquor prices," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 23(3), pages 303-316, October.

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