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An Economic Model of Youth Smoking: Tax and Welfare Effects

Author

Listed:
  • Steven M. Suranovic

    (The George Washington University)

Abstract

This paper presents a model of smoking choice in which rationality is bounded by limitations in intertemporal computational abilities. The model is applied to the youth decision to initiate smoking. Lifetime smoking paths of representative smokers indicate that youths may experience a reduction in lifetime utility and come to regret their decision to smoke. It is suggested that public policy interventions that raise the near term cost of smoking will be more effective in reducing lifetime smoking than informational campaigns that emphasize future health costs. However, youth taxes would have to be quite high to substantially reduce smoking rates among youths who have already begun to smoke. Also, low youth taxes would not prevent future smoking as an adult, although they would reduce smoking rates and lead to earlier quitting.

Suggested Citation

  • Steven M. Suranovic, 2005. "An Economic Model of Youth Smoking: Tax and Welfare Effects," HEW 0511003, EconWPA.
  • Handle: RePEc:wpa:wuwphe:0511003
    Note: Type of Document - pdf; pages: 38
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    File URL: http://econwpa.repec.org/eps/hew/papers/0511/0511003.pdf
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    References listed on IDEAS

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    6. Jonathan Gruber & Botond Koszegi, 2000. "Is Addiction "Rational"? Theory and Evidence," NBER Working Papers 7507, National Bureau of Economic Research, Inc.
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    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.
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    Cited by:

    1. Grignon, Michel, 2009. "An empirical investigation of heterogeneity in time preferences and smoking behaviors," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(5), pages 739-751, October.

    More about this item

    Keywords

    Cigarettes; smoking; addiction; Behavioral economics;

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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