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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 J. 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.

Suggested Citation

  • Donald S. Kenkel & Maximilian D. Schmeiser & Carly J. Urban, 2014. "Is Smoking Inferior? Evidence from Variation in the Earned Income Tax Credit," NBER Working Papers 20097, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:20097
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Bishop, James, 2015. "Interacting effects of state cigarette taxes on smoking participation," MPRA Paper 66609, University Library of Munich, Germany.
    2. 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.
    3. MORIKAWA Masayuki, 2018. "Smoking, Obesity, and Labor Market Outcomes: Evidence from Japan," Discussion papers 18023, Research Institute of Economy, Trade and Industry (RIETI).
    4. repec:bla:ecinqu:v:55:y:2017:i:4:p:1986-2007 is not listed on IDEAS
    5. 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.
    6. repec:eee:socmed:v:194:y:2017:i:c:p:67-75 is not listed on IDEAS
    7. 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).
    8. 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.
    9. repec:eee:jcecon:v:46:y:2018:i:1:p:53-77 is not listed on IDEAS
    10. 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.
    11. 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.
    12. 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.
    13. Ajay Mahal & Lainie Sutton, 2014. "Economic prosperity and non-communicable disease: understanding the linkages," Chapters,in: Handbook on Food, chapter 12, pages 278-324 Edward Elgar Publishing.
    14. Wehby, George & Dave, Dhaval M. & Kaestner, Robert, 2016. "Effects of the Minimum Wage on Infant Health," IZA Discussion Papers 10039, Institute for the Study of Labor (IZA).
    15. 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.
    16. 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 for the Study of Labor (IZA).
    17. repec:kap:reveho:v:15:y:2017:i:4:d:10.1007_s11150-016-9346-9 is not listed on IDEAS
    18. 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.
    19. 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.
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    More about this item

    JEL classification:

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

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