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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

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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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1413.

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Date of creation: Feb 2014
Date of revision: Jul 2014
Handle: RePEc:upf:upfgen:1413
Contact details of provider: Web page: http://www.econ.upf.edu/

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  1. Michael Kvasnicka & Harald Tauchmann, 2010. "Much Ado About Nothing? – Smoking Bans and Germany’s Hospitality Industry," Ruhr Economic Papers 0172, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  2. Madden, David, 2006. "Sample Selection Versus Two-Part Models Revisited: The Case of Female Smoking and Drinking," Papers HRBWP23, Economic and Social Research Institute (ESRI).
  3. Hans Melberg & Karl Lund, 2012. "Do smoke-free laws affect revenues in pubs and restaurants?," The European Journal of Health Economics, Springer, vol. 13(1), pages 93-99, February.
  4. Gabriel M. Ahlfeldt & Wolfgang Maennig, 2010. "Impact of Non-smoking Ordinances on Hospitality Revenues: The Case of Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 230(5), pages 506-521, October.
  5. J�r�me 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.
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