IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/4891.html

Cigarette Taxation and the Social Consequences of Smoking

Author

Listed:
  • W. Kip Viscusi

Abstract

This paper assesses the appropriate cigarette tax needed to address potential market failures. There is no evidence of inadequate risk decisions by smokers regarding their own welfare. Detailed calculations of the financial externalities of smoking indicate that the financial savings from premature mortality in terms of lower nursing home costs and retirement pensions exceed the higher medical care and life insurance costs generated. The costs of environmental tobacco smoke are highly uncertain, but of potentially substantial magnitude. Even with recognition of these costs, current cigarette taxes exceed the magnitude of the estimated net externalities.

Suggested Citation

  • W. Kip Viscusi, 1994. "Cigarette Taxation and the Social Consequences of Smoking," NBER Working Papers 4891, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:4891
    Note: EH PE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w4891.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Poterba, James M, 1989. "Lifetime Incidence and the Distributional Burden of Excise Taxes," American Economic Review, American Economic Association, vol. 79(2), pages 325-330, May.
    2. Harris, Jeffrey E, 1980. "Taxing Tar and Nicotine," American Economic Review, American Economic Association, vol. 70(3), pages 300-311, June.
    3. Viscusi, W Kip, 1990. "Do Smokers Underestimate Risks?," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1253-1269, December.
    4. Grossman, Michael, 1991. "The demand for cigarettes," Journal of Health Economics, Elsevier, vol. 10(1), pages 101-103, May.
    5. Becker, Gary S & Grossman, Michael & Murphy, Kevin M, 1994. "An Empirical Analysis of Cigarette Addiction," American Economic Review, American Economic Association, vol. 84(3), pages 396-418, June.
    6. Joni Hersch & W. Kip Viscusi, 1990. "Cigarette Smoking, Seatbelt Use, and Differences in Wage-Risk Tradeoffs," Journal of Human Resources, University of Wisconsin Press, vol. 25(2), pages 202-227.
    7. John B. Shoven & Jeffrey O. Sundberg & John P. Bunker, 1987. "The Social Security Cost of Smoking," NBER Working Papers 2234, National Bureau of Economic Research, Inc.
    8. Becker, Gary S & Grossman, Michael & Murphy, Kevin M, 1994. "An Empirical Analysis of Cigarette Addiction," American Economic Review, American Economic Association, vol. 84(3), pages 396-418, June.
    9. 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.
    10. John B. Shoven & Jeffrey O. Sundberg & John P. Bunker, 1989. "The Social Security Cost of Smoking," NBER Chapters, in: The Economics of Aging, pages 231-254, National Bureau of Economic Research, Inc.
    11. Ippolito, Pauline M. & Ippolito, Richard A., 1984. "Measuring the value of life saving from consumer reactions to new information," Journal of Public Economics, Elsevier, vol. 25(1-2), pages 53-81, November.
    12. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 675-700, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Viscusi, W. Kip, 1994. "Promoting Smokers' Welfare With Responsible Taxation," National Tax Journal, National Tax Association, vol. 47(3), pages 547-58, September.
    2. William N. Evans & Jeanne S. Ringel & Diana Stech, 1999. "Tobacco Taxes and Public Policy to Discourage Smoking," NBER Chapters, in: Tax Policy and the Economy, Volume 13, pages 1-56, National Bureau of Economic Research, Inc.
    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. Michael Grossman, 1993. "Policy Watch: Alcohol and Cigarette Taxes," Journal of Economic Perspectives, American Economic Association, vol. 7(4), pages 211-222, Fall.
    5. Chaloupka, Frank J. & Wechsler, Henry, 1997. "Price, tobacco control policies and smoking among young adults," Journal of Health Economics, Elsevier, vol. 16(3), pages 359-373, June.
    6. Cutler, David M & Epstein, Arnold M. & Frank, Richard G. & Hartman, Raymond & King, Charles III & Newhouse, Joseph P. & Rosenthal, Meredith B. & Vigdor, Elizabeth Richardson, 2000. "How Good a Deal Was the Tobacco Settlement? Assessing Payments to Massachusetts," Journal of Risk and Uncertainty, Springer, vol. 21(2-3), pages 235-261, November.
    7. Frank J. Chaloupka & Michael Grossman, 1996. "Price, Tobacco Control Policies and Youth Smoking," NBER Working Papers 5740, National Bureau of Economic Research, Inc.
    8. Hammar, Henrik & Carlsson, Fredrik, 2001. "Smokers' Decisions To Quit Smoking," Working Papers in Economics 59, University of Gothenburg, Department of Economics.
    9. Piccoli, Luca & Tiezzi, Silvia, 2021. "Rational addiction and time-consistency: An empirical test," Journal of Health Economics, Elsevier, vol. 80(C).
    10. Jeffrey E. Harris & Sandra W. Chan, 1999. "The continuum‐of‐addiction: cigarette smoking in relation to price among Americans aged 15–29," Health Economics, John Wiley & Sons, Ltd., vol. 8(1), pages 81-86, February.
    11. Liu, Jin-Long & Liu, Jin-Tan & Hammitt, James K. & Chou, Shin-Yi, 1999. "The price elasticity of opium in Taiwan, 1914-1942," Journal of Health Economics, Elsevier, vol. 18(6), pages 795-810, December.
    12. Viscusi, W. Kip, 1994. "Promoting Smokers' Welfare With Responsible Taxation," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(3), pages 547-558, September.
    13. Arni, Patrick & Dragone, Davide & Goette, Lorenz & Ziebarth, Nicolas R., 2021. "Biased health perceptions and risky health behaviors—Theory and evidence," Journal of Health Economics, Elsevier, vol. 76(C).
    14. Chen Zhen & Michael K. Wohlgenant, 2006. "Meat Demand under Rational Habit Persistence," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 54(4), pages 477-495, December.
    15. DeCicca, Philip & Kenkel, Don & Mathios, Alan, 2008. "Cigarette taxes and the transition from youth to adult smoking: Smoking initiation, cessation, and participation," Journal of Health Economics, Elsevier, vol. 27(4), pages 904-917, July.
    16. D. Dragone & D. Raggi, 2018. "Testing Rational Addiction: When Lifetime is Uncertain, One Lag is Enough," Working Papers wp1119, Dipartimento Scienze Economiche, Universita' di Bologna.
    17. Fethke, Gary & Jagannathan, Raj, 1996. "Habit persistence, heterogeneous tastes, and imperfect competition," Journal of Economic Dynamics and Control, Elsevier, vol. 20(6-7), pages 1193-1207.
    18. Dong C. Won & Young H. Lee, 2008. "Optimal dynamic pricing for sports games with habitual attendance," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(8), pages 639-655.
    19. André Raynauld & Jean-Pierre Vidal, 1992. "Smokers' Burden on Society: Myth and Reality in Canada," Canadian Public Policy, University of Toronto Press, vol. 18(3), pages 300-317, September.
    20. Sophie Massin, 2011. "La notion d'addiction en économie : La théorie du choix rationnel à l'épreuve," Revue d'économie politique, Dalloz, vol. 121(5), pages 713-750.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:4891. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.