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Tobacco Use, Taxation and Self Control in Adolescence

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  • Jason M. Fletcher
  • Partha Deb
  • Jody L. Sindelar

Abstract

Recent literature has suggested that higher taxes on addictive goods could increase welfare by assisting individuals with self control problems and trouble resisting 'temptation'. In contrast, if individuals continue to use despite increased prices, taxation may serve to reduce the welfare of these individuals while providing no benefits in managing self control nor mitigating externalities. We use data on adolescents from the National Longitudinal Study of Adolescent Health (Add Health) to examine the impact of tobacco taxes on smoking. To account for unobserved heterogeneity in response to taxes we estimate finite mixture models, positing two types of individuals with differential responses to taxes. We find evidence of differential price elasticity for tobacco use across the adolescents groups, and show that individuals with low self control or high discount rates are largely unresponsive to cigarette price. Those who have the least willpower may need the most help in quitting but are unresponsive to taxes, suggesting that policies other than taxation may be needed to reduce adolescent tobacco use.

Suggested Citation

  • Jason M. Fletcher & Partha Deb & Jody L. Sindelar, 2009. "Tobacco Use, Taxation and Self Control in Adolescence," NBER Working Papers 15130, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:15130
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Sofie Kragh Pedersen & Alexander K. Koch & Julia Nafziger, 2014. "Who Wants Paternalism?," Bulletin of Economic Research, Wiley Blackwell, vol. 66(S1), pages 147-166, December.
    2. Odermatt, Reto & Stutzer, Alois, 2015. "Smoking bans, cigarette prices and life satisfaction," Journal of Health Economics, Elsevier, vol. 44(C), pages 176-194.
    3. Battaglini, Marco & Díaz, Carlos & Patacchini, Eleonora, 2017. "Self-control and peer groups: An empirical analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 134(C), pages 240-254.
    4. Patacchini, Eleonora & Arduini, Tiziano, 2016. "Residential choices of young Americans," Journal of Housing Economics, Elsevier, vol. 34(C), pages 69-81.
    5. Odermatt, Reto & Stutzer, Alois, 2015. "Smoking bans, cigarette prices and life satisfaction," Journal of Health Economics, Elsevier, vol. 44(C), pages 176-194.
    6. Ian Irvine & William Sims, 2012. "A Taxing Dilemma: Assessing the Impact of Tax and Price Changes on the Tobacco Market," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 350, May.
    7. Marti, Joachim, 2012. "A best–worst scaling survey of adolescents' level of concern for health and non-health consequences of smoking," Social Science & Medicine, Elsevier, vol. 75(1), pages 87-97.
    8. Jason Fletcher & Norma Padrón, 2016. "The effects of teenage childbearing on adult soft skills development," Journal of Population Economics, Springer;European Society for Population Economics, vol. 29(3), pages 883-910, July.
    9. Chih-Sheng Hsieh & Hans van Kippersluis, 2015. "Smoking Initiation: Peers and Personality," Tinbergen Institute Discussion Papers 15-093/V, Tinbergen Institute.

    More about this item

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I0 - Health, Education, and Welfare - - General
    • I1 - Health, Education, and Welfare - - Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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