Cigarette Taxation and the Social Consequences of Smoking

86 Pages Posted: 24 Jul 2000 Last revised: 15 May 2022

See all articles by W. Kip Viscusi

W. Kip Viscusi

Vanderbilt University - Law School; National Bureau of Economic Research (NBER); Vanderbilt University - College of Arts and Science - Department of Economics; Vanderbilt University - Owen Graduate School of Management; Vanderbilt University - Strategy and Business Economics

Date Written: October 1994

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

Viscusi, W. Kip, Cigarette Taxation and the Social Consequences of Smoking (October 1994). NBER Working Paper No. w4891, Available at SSRN: https://ssrn.com/abstract=226506

W. Kip Viscusi (Contact Author)

Vanderbilt University - Law School ( email )

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615-343-7715 (Phone)
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HOME PAGE: http://law.vanderbilt.edu/bio/?pid=w-kip-viscusi

National Bureau of Economic Research (NBER)

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Vanderbilt University - College of Arts and Science - Department of Economics

Box 1819 Station B
Nashville, TN 37235
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://as.vanderbilt.edu/economics/bio/wkip-viscusi/

Vanderbilt University - Owen Graduate School of Management

401 21st Avenue South
Nashville, TN 37203
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://business.vanderbilt.edu/bio/w-kip-viscusi/

Vanderbilt University - Strategy and Business Economics

Nashville, TN 37203
United States

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