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The effect of a major cigarette price change on smoking behavior in california: a zero-inflated negative binomial model

Listed author(s):
  • Mei-ling Sheu

    (Taipei Medical University, Taiwan)

  • Teh-wei Hu

    (University of California, Berkeley, USA)

  • Theodore E. Keeler

    (University of California, Berkeley, USA)

  • Michael Ong

    (University of California, San Francisco, USA)

  • Hai-Yen Sung

    (University of California, San Francisco, USA)

Registered author(s):

    The objective of this paper is to determine the price sensitivity of smokers in their consumption of cigarettes, using evidence from a major increase in California cigarette prices due to Proposition 10 and the Tobacco Settlement. The study sample consists of individual survey data from Behavioral Risk Factor Survey (BRFS) and price data from the Bureau of Labor Statistics between 1996 and 1999. A zero-inflated negative binomial (ZINB) regression model was applied for the statistical analysis. The statistical model showed that price did not have an effect on reducing the estimated prevalence of smoking. However, it indicated that among smokers the price elasticity was at the level of −0.46 and statistically significant. Since smoking prevalence is significantly lower than it was a decade ago, price increases are becoming less effective as an inducement for hard-core smokers to quit, although they may respond by decreasing consumption. For those who only smoke occasionally (many of them being young adults) price increases alone may not be an effective inducement to quit smoking. Additional underlying behavioral factors need to be identified so that more effective anti-smoking strategies can be developed. Copyright © 2004 John Wiley & Sons, Ltd.

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    File URL: http://hdl.handle.net/10.1002/hec.849
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    Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

    Volume (Year): 13 (2004)
    Issue (Month): 8 ()
    Pages: 781-791

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    Handle: RePEc:wly:hlthec:v:13:y:2004:i:8:p:781-791
    DOI: 10.1002/hec.849
    Contact details of provider: Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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    1. Lewit, Eugene M & Coate, Douglas & Grossman, Michael, 1981. "The Effects of Government Regulation on Teenage Smoking," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 545-569, December.
    2. Chaloupka, Frank, 1991. "Rational Addictive Behavior and Cigarette Smoking," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 722-742, August.
    3. Jonathan Gruber, 2001. "Tobacco at the Crossroads: The Past and Future of Smoking Regulation in the United States," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 193-212, Spring.
    4. Hai-Yen Sung & Teh-Wei Hu & Theodore E. Keeler, 1994. "Cigarette Taxation And Demand: An Empirical Model," Contemporary Economic Policy, Western Economic Association International, vol. 12(3), pages 91-100, 07.
    5. Vuong, Quang H, 1989. "Likelihood Ratio Tests for Model Selection and Non-nested Hypotheses," Econometrica, Econometric Society, vol. 57(2), pages 307-333, March.
    6. Jones, Andrew M, 1989. "A Double-Hurdle Model of Cigarette Consumption," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 4(1), pages 23-39, Jan.-Mar..
    7. Andrew M. Jones, 2012. "health econometrics," The New Palgrave Dictionary of Economics, Palgrave Macmillan.
    8. William H. Greene, 1994. "Accounting for Excess Zeros and Sample Selection in Poisson and Negative Binomial Regression Models," Working Papers 94-10, New York University, Leonard N. Stern School of Business, Department of Economics.
    9. Lewit, Eugene M. & Coate, Douglas, 1982. "The potential for using excise taxes to reduce smoking," Journal of Health Economics, Elsevier, vol. 1(2), pages 121-145, August.
    10. Wasserman, Jeffrey & Manning, Willard G. & Newhouse, Joseph P. & Winkler, John D., 1991. "The effects of excise taxes and regulations on cigarette smoking," Journal of Health Economics, Elsevier, vol. 10(1), pages 43-64, May.
    11. James R. Blaylock & W. Noel Blisard, 1992. "U.S. Cigarette Consumption: The Case of Low-Income Women," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(3), pages 698-705.
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