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Is Smoking Inferior?: Evidence from Variation in the Earned Income Tax Credit

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  • Donald S. Kenkel
  • Maximilian D. Schmeiser
  • Carly Urban

Abstract

In this paper we estimate the causal income elasticity of smoking participation, cessation, and cigarette demand conditional upon participation. Using an instrumental variables (IV) estimation strategy, we find that smoking appears to be a normal good among low-income adults: Higher-instrumented income is associated with an increase in the number of cigarettes consumed and a decrease in smoking cessation. The magnitude and direction of the changes in the income coefficients from our OLS to IV estimates are consistent with the hypothesis that correlational estimates between income and smoking-related outcomes are biased by unobservable characteristics that differentiate higher-income smokers from lower-income smokers.

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  • Donald S. Kenkel & Maximilian D. Schmeiser & Carly Urban, 2014. "Is Smoking Inferior?: Evidence from Variation in the Earned Income Tax Credit," Journal of Human Resources, University of Wisconsin Press, vol. 49(4), pages 1094-1120.
  • Handle: RePEc:uwp:jhriss:v:49:y:2014:i:4:p:1094-1120
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    Cited by:

    1. Christian Raschke, 2016. "The Impact of the German Child Benefit on Household Expenditures and Consumption," German Economic Review, Verein für Socialpolitik, vol. 17(4), pages 438-477, November.
    2. Brady P. Horn & Johanna Catherine Maclean & Michael R. Strain, 2017. "Do Minimum Wage Increases Influence Worker Health?," Economic Inquiry, Western Economic Association International, vol. 55(4), pages 1986-2007, October.
    3. Irina B. Grafova & Alan C. Monheit, 2019. "How does actual unemployment and the perceived risk of joblessness affect smoking behavior? Gender and intra-family effects," Review of Economics of the Household, Springer, vol. 17(1), pages 201-227, March.
    4. Hans van Kippersluis & Titus J. Galama, 2013. "Why the Rich drink more but smoke less: The Impact of Wealth on Health Behaviors," Tinbergen Institute Discussion Papers 13-035/V, Tinbergen Institute.
    5. Markowitz, Sara & Komro, Kelli A. & Livingston, Melvin D. & Lenhart, Otto & Wagenaar, Alexander C., 2017. "Effects of state-level Earned Income Tax Credit laws in the U.S. on maternal health behaviors and infant health outcomes," Social Science & Medicine, Elsevier, vol. 194(C), pages 67-75.
    6. Christian Raschke, 2012. "The Impact of the German Child Benefit on Child Well-Being," SOEPpapers on Multidisciplinary Panel Data Research 520, DIW Berlin, The German Socio-Economic Panel (SOEP).
    7. Sepulveda, Facundo, 2014. "Air Pollution And Sick Leaves: The Child Health Link," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 55(2), pages 109-120, December.
    8. Cheng, Lingguo & Liu, Hong & Zhang, Ye & Zhao, Zhong, 2018. "The health implications of social pensions: Evidence from China's new rural pension scheme," Journal of Comparative Economics, Elsevier, vol. 46(1), pages 53-77.
    9. Johanna Catherine Maclean & Michael F. Pesko & Steven C. Hill, 2017. "The Effect of Insurance Expansions on Smoking Cessation Medication Prescriptions: Evidence from ACA Medicaid Expansions," NBER Working Papers 23450, National Bureau of Economic Research, Inc.
    10. Dhaval M. Dave & Robert Kaestner & George L. Wehby, 2015. "Does Medicaid Coverage for Pregnant Women Affect Prenatal Health Behaviors?," NBER Working Papers 21049, National Bureau of Economic Research, Inc.
    11. Ajay Mahal & Lainie Sutton, 2014. "Economic prosperity and non-communicable disease: understanding the linkages," Chapters, in: Raghbendra Jha & Raghav Gaiha & Anil B. Deolalikar (ed.),Handbook on Food, chapter 12, pages 278-324, Edward Elgar Publishing.
    12. George L. Wehby & Dhaval M. Dave & Robert Kaestner, 2020. "Effects of the Minimum Wage on Infant Health," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 39(2), pages 411-443, March.
    13. Lawrence M. Berger & Sarah A. Font & Kristen S. Slack & Jane Waldfogel, 2017. "Income and child maltreatment in unmarried families: evidence from the earned income tax credit," Review of Economics of the Household, Springer, vol. 15(4), pages 1345-1372, December.
    14. Erdal Tekin & Chandler McClellan & Karen Jean Minyard, 2013. "Health and Health Behaviors during the Worst of Times," NBER Working Papers 19234, National Bureau of Economic Research, Inc.
    15. Bishop, James, 2015. "Interacting effects of state cigarette taxes on smoking participation," MPRA Paper 66609, University Library of Munich, Germany.
    16. MORIKAWA Masayuki, 2018. "Smoking, Obesity, and Labor Market Outcomes: Evidence from Japan," Discussion papers 18023, Research Institute of Economy, Trade and Industry (RIETI).
    17. James M. Bishop, 2018. "Does Cigarette Smuggling Prop Up Smoking Rates?," American Journal of Health Economics, MIT Press, vol. 4(1), pages 80-104, Winter.
    18. Fu, Wei & Liu, Feng, 2019. "Unemployment insurance and cigarette smoking," Journal of Health Economics, Elsevier, vol. 63(C), pages 34-51.
    19. Dhaval M. Dave & Robert Kaestner & George L. Wehby, 2019. "Does public insurance coverage for pregnant women affect prenatal health behaviors?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 32(2), pages 419-453, April.
    20. Tekin, Erdal & McClellan, Chandler & Minyard, Karen Jean, 2013. "Health and Health Behaviors during the Worst of Times: Evidence from the Great Recession," IZA Discussion Papers 7538, Institute of Labor Economics (IZA).
    21. Dursun, Bahadır & Cesur, Resul & Mocan, Naci, 2018. "The Impact of Education on Health Outcomes and Behaviors in a Middle-Income, Low-Education Country," Economics & Human Biology, Elsevier, vol. 31(C), pages 94-114.
    22. Otto Lenhart, 2019. "The effects of income on health: new evidence from the Earned Income Tax Credit," Review of Economics of the Household, Springer, vol. 17(2), pages 377-410, June.
    23. Mocan, Naci & Raschke, Christian & Unel, Bulent, 2015. "The impact of mothers’ earnings on health inputs and infant health," Economics & Human Biology, Elsevier, vol. 19(C), pages 204-223.

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    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • I1 - Health, Education, and Welfare - - Health

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