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Cigarette Taxation and Pregnancy: Policy Based Estimates of the Price Elasticity of Smoking During Pregnancy

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  • David Simon

    (University of Connecticut)

Abstract

Cigarette taxation has long been a policy tool used to incentivize healthier behavior. Pregnant women are a group of particular interest in this context due to their unique position to pass health capital down to the next generation. This paper reviews the literature on the tax and price responsiveness of pregnant women to smoking during pregnancy. I first discuss the use of cigarette taxes as a natural experiment and the econometric specifications typically used in the literature. I continue to review overall trends in the tax responsiveness of smoking during pregnancy as well as results by subgroups. Next, I discuss evidence on how facing a tax during pregnancy might uniquely effect women’s decision to smoke. I conclude with a discussion of how taxes have been extended into second-stage effects on birth outcomes and future avenues of research. I generally find evidence of pregnant women responding to tax increases, although the elasticities have decreased in magnitude in more recent years. This is consistent with the story suggesting that the least addicted smokers quit in the 1990s, leaving less elastic smokers in the 2000s. Furthermore, women seem to be more responsive to taxes during pregnancy than before pregnancy. Overall, cigarette taxes can be used to evaluate health outcomes, which is a fertile area for future research.

Suggested Citation

  • David Simon, 2014. "Cigarette Taxation and Pregnancy: Policy Based Estimates of the Price Elasticity of Smoking During Pregnancy," Working papers 2014-22, University of Connecticut, Department of Economics.
  • Handle: RePEc:uct:uconnp:2014-22
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    File URL: http://web2.uconn.edu/economics/working/2014-22.pdf
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    References listed on IDEAS

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    1. Kevin Callison & Robert Kaestner, 2014. "Do Higher Tobacco Taxes Reduce Adult Smoking? New Evidence Of The Effect Of Recent Cigarette Tax Increases On Adult Smoking," Economic Inquiry, Western Economic Association International, vol. 52(1), pages 155-172, January.
    2. Aigner, Dennis J., 1973. "Regression with a binary independent variable subject to errors of observation," Journal of Econometrics, Elsevier, vol. 1(1), pages 49-59, March.
    3. David Simon, 2013. "Does Early Life Exposure to Cigarette Smoke Permanently Harm Childhood Health? Evidence from Cigarette Tax Hikes," Working papers 2013-21, University of Connecticut, Department of Economics, revised May 2015.
    4. 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.
    5. Colman, Greg & Grossman, Michael & Joyce, Ted, 2003. "The effect of cigarette excise taxes on smoking before, during and after pregnancy," Journal of Health Economics, Elsevier, vol. 22(6), pages 1053-1072, November.
    6. W. David Bradford, 2003. "Pregnancy and the Demand for Cigarettes," American Economic Review, American Economic Association, pages 1752-1763.
    7. Evans, William N. & Ringel, Jeanne S., 1999. "Can higher cigarette taxes improve birth outcomes?," Journal of Public Economics, Elsevier, pages 135-154.
    8. Jonathan Gruber & Botond Köszegi, 2001. "Is Addiction "Rational"? Theory and Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 116(4), pages 1261-1303.
    9. Jérôme Adda & Francesca Cornaglia, 2006. "Taxes, Cigarette Consumption, and Smoking Intensity," American Economic Review, American Economic Association, pages 1013-1028.
    10. Jérôme Adda & Francesca Cornaglia, 2006. "Taxes, Cigarette Consumption, and Smoking Intensity," American Economic Review, American Economic Association, pages 1013-1028.
    11. Evans, William N. & Ringel, Jeanne S., 1999. "Can higher cigarette taxes improve birth outcomes?," Journal of Public Economics, Elsevier, pages 135-154.
    12. Peter Kennedy, 2003. "A Guide to Econometrics, 5th Edition," MIT Press Books, The MIT Press, edition 5, volume 1, number 026261183x, January.
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    More about this item

    Keywords

    Smoking; pregnancy; health; cigarettes; tax policy; price elasticity;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • I1 - Health, Education, and Welfare - - Health
    • J1 - Labor and Demographic Economics - - Demographic Economics

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