Taxes, Cigarette Consumption and Smoking Intensity
38 Pages Posted: 29 Nov 2005
Date Written: November 2005
Abstract
This paper analyses the compensatory behavior of smokers. Exploiting data on cotinine concentration - a metabolite of nicotine - measured in a large population of smokers over time, we show that smokers compensate tax hikes by extracting more nicotine per cigarette. Our study makes two important contributions. First, as smoking more intensively a given cigarette is detrimental to health, our results question the usefulness of tax increases. Second, we develop a model of rational addiction where agents can also adjust their intensity of smoking and we show that the previous empirical results suffer from severe estimation biases.
Keywords: taxes, smoking, cigarettes, addiction
JEL Classification: I1
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Is Addiction "Rational"? Theory and Evidence
By Jonathan Gruber and Botond Koszegi
-
An Empirical Analysis of Cigarette Addiction
By Gary S. Becker, Michael Grossman, ...
-
The Effects of Government Regulation on Teenage Smoking
By Eugene M. Lewit, Douglas Coate, ...
-
Price, Tobacco Control Policies and Smoking Among Young Adults
By Frank J. Chaloupka and Henry Wechsler
-
Youth Smoking in the U.S.: Evidence and Implications
By Jonathan Gruber and Jonathan Zinman
-
An Empirical Analysis of Alcohol Addiction: Results from the Monitoring the Future Panels
By Michael Grossman, Frank J. Chaloupka, ...