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The Effect of Cigarette Prices on Youth Smoking

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  • Ross, Hana PhD
  • Chaloupka, Frank J. PhD

Abstract

Prior economic research provides mixed evidence on the impact of cigarette prices on youth smoking. This paper empirically tests the effects of various price measures on youth demand for cigarettes using data collected in a recent nationally representative survey of 17,287 high school students. In addition to commonly used cigarette price measures, the study also examined the effect of price as perceived by the students. This unique information permits the study of the effect of teen-specific price on cigarette demand. The analysis employed a two-part model of cigarette demand based on a model developed by Cragg (1971) in which the propensity to smoke and the intensity of the smoking habit are modeled separately. The results confirm that higher cigarette prices, irrespective of the way they are measured, reduce youth cigarette smoking. The split of the price effect on smoking probability and on smoking intensity depends on the price measure used in the model. The largest impact on cigarette demand has the teenspecific, perceived price of cigarettes.

Suggested Citation

  • Ross, Hana PhD & Chaloupka, Frank J. PhD, 2001. "The Effect of Cigarette Prices on Youth Smoking," University of California at San Francisco, Center for Tobacco Control Research and Education qt8004m9n5, Center for Tobacco Control Research and Education, UC San Francisco.
  • Handle: RePEc:cdl:ctcres:qt8004m9n5
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    References listed on IDEAS

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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. Mullahy, John, 1998. "Much ado about two: reconsidering retransformation and the two-part model in health econometrics," Journal of Health Economics, Elsevier, vol. 17(3), pages 247-281, June.
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    4. Frank J. Chaloupka & Michael Grossman, 1996. "Price, Tobacco Control Policies and Youth Smoking," NBER Working Papers 5740, National Bureau of Economic Research, Inc.
    5. 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.
    6. repec:aph:ajpbhl:1998:88:8:1193-1198_4 is not listed on IDEAS
    7. Blough, David K. & Madden, Carolyn W. & Hornbrook, Mark C., 1999. "Modeling risk using generalized linear models," Journal of Health Economics, Elsevier, vol. 18(2), pages 153-171, April.
    8. 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.
    9. Manning, Willard G. & Mullahy, John, 2001. "Estimating log models: to transform or not to transform?," Journal of Health Economics, Elsevier, vol. 20(4), pages 461-494, July.
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    Cited by:

    1. Jennifer M. Mellor & Beth A. Freeborn, 2011. "Religious participation and risky health behaviors among adolescents," Health Economics, John Wiley & Sons, Ltd., vol. 20(10), pages 1226-1240, October.
    2. Reiner Hanewinkel & Christian Radden & Tobias Rosenkranz, 2008. "Price increase causes fewer sales of factory-made cigarettes and higher sales of cheaper loose tobacco in Germany," Health Economics, John Wiley & Sons, Ltd., vol. 17(6), pages 683-693.
    3. Deliana Kostova & Hana Ross & Evan Blecher & Sara Markowitz, 2010. "Prices and Cigarette Demand: Evidence from Youth Tobacco Use in Developing Countries," NBER Working Papers 15781, National Bureau of Economic Research, Inc.
    4. Diener, Alan & Ahmed, Rashid & Snider, Judy & Kaiserman, Murray, 2007. "Retailer Compliance as a Predictor of Youth Smoking Participation and Consumption," MPRA Paper 3078, University Library of Munich, Germany.
    5. Tworek, Cindy & Yamaguchi, Ryoko & Kloska, Deborah D. & Emery, Sherry & Barker, Dianne C. & Giovino, Gary A. & O'Malley, Patrick M. & Chaloupka, Frank J., 2010. "State-level tobacco control policies and youth smoking cessation measures," Health Policy, Elsevier, vol. 97(2-3), pages 136-144, October.
    6. Sara Markowitz & John Tauras, 2006. "Even For Teenagers, Money Does Not Grow on Trees: Teenage Substance Use and Budget Constraints," NBER Working Papers 12300, National Bureau of Economic Research, Inc.
    7. Sara Markowitz & John Tauras, 2009. "Substance use among adolescent students with consideration of budget constraints," Review of Economics of the Household, Springer, vol. 7(4), pages 423-446, December.
    8. Hana Ross & Frank J. Chaloupka & Melanie Wakefield, 2006. "Youth Smoking Uptake Progress: Price and Public Policy Effects," Eastern Economic Journal, Eastern Economic Association, vol. 32(2), pages 355-367, Spring.
    9. Anindya Sen & Tony Wirjanto, 2010. "Estimating the impacts of cigarette taxes on youth smoking participation, initiation, and persistence: empirical evidence from Canada," Health Economics, John Wiley & Sons, Ltd., vol. 19(11), pages 1264-1280.
    10. Philip DeCicca & Donald Kenkel & Alan Mathios & Yoon-Jeong Shin & Jae-Young Lim, 2008. "Youth smoking, cigarette prices, and anti-smoking sentiment," Health Economics, John Wiley & Sons, Ltd., vol. 17(6), pages 733-749.
    11. Hana Ross & Lisa M. Powell & John A. Tauras & Frank J. Chaloupka, 2005. "New Evidence on Youth Smoking Behavior based on Experimental Price Increases," Contemporary Economic Policy, Western Economic Association International, vol. 23(2), pages 195-210, April.
    12. Powell, Lisa M. & Tauras, John A. & Ross, Hana, 2005. "The importance of peer effects, cigarette prices and tobacco control policies for youth smoking behavior," Journal of Health Economics, Elsevier, vol. 24(5), pages 950-968, September.
    13. repec:kap:iaecre:v:11:y:2005:i:3:p:275-290 is not listed on IDEAS
    14. Steven M. Suranovic, 2005. "An Economic Model of Youth Smoking: Tax and Welfare Effects," HEW 0511003, EconWPA.
    15. Karel Janda & Martin Strobl, 2018. "Smoking Czechs: Modeling Tobacco Consumption and Taxation," Working Papers IES 2018/01, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jan 2018.
    16. Savage, Michael, 2017. "Do youth access control policies stop young people smoking? Evidence from Ireland," Papers WP572, Economic and Social Research Institute (ESRI).
    17. Christopher Carpenter & Philip J. Cook, 2007. "Cigarette Taxes and Youth Smoking: New Evidence from National, State, & Local Youth Risk Behavior Surveys," NBER Working Papers 13046, National Bureau of Economic Research, Inc.
    18. Eleni Raptou & Konstadinos Mattas & Efthimia Tsakiridou & Constantinos Katrakilidis, 2005. "Factors Affecting Cigarette Demand," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 11(3), pages 275-290, August.

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    Keywords

    youth; smoking incidence; pricing;

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