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Cutting through the smoke: separating the effect of price on smoking initiation, relapse and cessation

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  • Feng Liu

Abstract

I employ a large national representative dataset (Current Population Survey-Tobacco Use Supplements) to investigate how cigarette prices affect smoking decisions. A standard econometric approach is to estimate the relationship between cigarette prices and smoking participation at a point in time. I extend this approach to model past-year decisions to start, resume or quit smoking. Considering reverse causality, I apply an instrumental variable (excise taxes) for cigarette prices. I include an index of state-level anti-smoking sentiment to control for omitted variable bias. After estimating separate models for smoking initiation, relapse and cessation and for different age groups, I find no evidence that increasing taxes on cigarettes can prevent the onset of youth smoking. Neither does it effectively induce young smokers to quit. However, cigarette prices do play an important role to prevent relapse and encourage quitting at older ages.

Suggested Citation

  • Feng Liu, 2010. "Cutting through the smoke: separating the effect of price on smoking initiation, relapse and cessation," Applied Economics, Taylor & Francis Journals, vol. 42(23), pages 2921-2939.
  • Handle: RePEc:taf:applec:v:42:y:2010:i:23:p:2921-2939
    DOI: 10.1080/00036840801964880
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    References listed on IDEAS

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    1. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2011. "Robust Inference With Multiway Clustering," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 29(2), pages 238-249, April.
    2. Jonathan Gruber, 2000. "Youth Smoking in the U.S.: Prices and Policies," NBER Working Papers 7506, National Bureau of Economic Research, Inc.
    3. John A. Tauras, 1999. "The Transition to Smoking Cessation: Evidence from Multiple Failure Duration Analysis," NBER Working Papers 7412, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Lillard, Dean R. & Molloy, Eamon & Sfekas, Andrew, 2013. "Smoking initiation and the iron law of demand," Journal of Health Economics, Elsevier, vol. 32(1), pages 114-127.
    2. Fu, Wei & Liu, Feng, 2019. "Unemployment insurance and cigarette smoking," Journal of Health Economics, Elsevier, vol. 63(C), pages 34-51.
    3. G. Guindon, 2014. "The impact of tobacco prices on smoking onset in Vietnam: duration analyses of retrospective data," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(1), pages 19-39, January.
    4. Johanna Catherine MacLean & Asia Sikora Kessler & Donald S. Kenkel, 2016. "Cigarette Taxes and Older Adult Smoking: Evidence from the Health and Retirement Study," Health Economics, John Wiley & Sons, Ltd., vol. 25(4), pages 424-438, April.
    5. Wehby, George L. & Courtemanche, Charles J., 2012. "The heterogeneity of the cigarette price effect on body mass index," Journal of Health Economics, Elsevier, vol. 31(5), pages 719-729.
    6. Paolo Liberati & Francesco Crespi & Massimo Paradiso & Simone Tedeschi & Antonio Scialà, 2018. "Smokers Are Different: The Heterogeneity Of Smokers’ Responses To Price Increases," Departmental Working Papers of Economics - University 'Roma Tre' 0237, Department of Economics - University Roma Tre.

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