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Who is afraid of the big bad ban? An evaluation of the effects of the Spanish clean air law on expenditure at hospitality venues

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Abstract

Background: In January 2011 Spain modified clean air legislation in force since 2006, removing all existing exceptions applicable to hospitality venues. Although this legal reform was backed by all political parties with parliamentary representation, the government’s initiative was contested by the tobacco industry and its allies in the hospitality industry. One of the most voiced arguments against the reform was its potentially disruptive effect on the revenue of hospitality venues. This paper evaluates the impact of this reform on household expenditure at restaurants and bars and cafeterias. Methods and empirical strategy: We use household expenditure micro-data for years 2006 to 2012 to estimate models for the probability of observing expenditures and the expected level of expenditure. We apply a beforeafter analysis with a wide range of controls for confounding factors and a flexible modeling of time effects in order to identify the effects of the reform. Results: Our results suggest that the reform caused a 2% reduction in the proportion of households containing smokers but did not cause reductions in households’ expenditures on restaurant services or on bars and cafeteria services.

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  • Jaume Garcia Villar & Ángel López-Nicolás, 2014. "Who is afraid of the big bad ban? An evaluation of the effects of the Spanish clean air law on expenditure at hospitality venues," Economics Working Papers 1413, Department of Economics and Business, Universitat Pompeu Fabra, revised Jul 2014.
  • Handle: RePEc:upf:upfgen:1413
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    1. Jérôme Adda & Samuel Berlinski & Stephen Machin, 2012. "Market Regulation and Firm Performance: The Case of Smoking Bans in the United Kingdom," Journal of Law and Economics, University of Chicago Press, vol. 55(2), pages 365-391.
    2. Michael Kvasnicka & Harald Tauchmann, 2012. "Much ado about nothing? Smoking bans and Germany's hospitality industry," Applied Economics, Taylor & Francis Journals, vol. 44(35), pages 4539-4551, December.
    3. Madden, David, 2008. "Sample selection versus two-part models revisited: The case of female smoking and drinking," Journal of Health Economics, Elsevier, vol. 27(2), pages 300-307, March.
    4. Ahlfeldt Gabriel M. & Maennig Wolfgang, 2010. "Impact of Non-smoking Ordinances on Hospitality Revenues: The Case of Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 230(5), pages 506-521, October.
    5. Hans Melberg & Karl Lund, 2012. "Do smoke-free laws affect revenues in pubs and restaurants?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 13(1), pages 93-99, February.
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    Keywords

    smoking bans; hospitality venues; household expenditure; policy evaluation.;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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