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Using Cigarette Taxes When Smokers Are Heterogeneous: Evidence on Hyperbolic Preferences, Endogenous Preferences, Smoking, and Price Elasticity of Smoking in France

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  • Michel Grignon

    (Department of Economics and Department of Health, Aging, & Society, McMaster University)

Abstract

I use a unique dataset to estimate the relationship between time preferences, social capital, and the decision to start and quit smoking. I find impatient respondents do not differ much from patient ones, but quasi-hyperbolic respondents tend to smoke more often and have much more difficulties quitting. I also find that trust in the community protects from starting and helps quitting, but sense of control encourages starting smoking. These preliminary results strongly suggest that smokers form a heterogeneous population: I argue that such heterogeneity means that taxes on cigarettes are a blunt and inefficient instrument of public health.

Suggested Citation

  • Michel Grignon, 2007. "Using Cigarette Taxes When Smokers Are Heterogeneous: Evidence on Hyperbolic Preferences, Endogenous Preferences, Smoking, and Price Elasticity of Smoking in France," Centre for Health Economics and Policy Analysis Working Paper Series 2007-10, Centre for Health Economics and Policy Analysis (CHEPA), McMaster University, Hamilton, Canada.
    • Handle: RePEc:hpa:wpaper:200710
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    File URL: http://www.chepa.org/Files/Working%20Papers/CHEPA%20WP%2007-10.pdf
    File Function: First version, 2007
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    Cited by:

    1. Pierre Pestieau & Gregory Ponthiere, 2012. "Myopia, regrets, and risky behaviors," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(2), pages 288-317, April.

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