Cigarette Taxes and Older Adult Smoking: Evidence from Recent Large Tax Increases

Abstract

While recent evidence casts some doubt, it is generally-accepted that the price sensitivity of smoking varies inversely with age. We investigate the responsiveness of older adult smoking using variation from recent historically-large cigarette tax increases in the United States. Using data from the Behavioral Risk Factor Surveillance System from 2000 to 2005, we find consistent evidence that higher taxes reduced smoking participation by adults aged forty-five to fifty-nine, especially those who are less-educated and live in low-income households. Our findings run contrary to existing evidence which implies that cessation behavior by older adults is not sensitive to price. Since a large literature suggests smoking cessation even later-in-life reduces morbidity and increases longevity, our findings may represent substantial gains in health among tax-induced quitters.

Keywords: taxes and smoking behavior, economics of smoking, aging, health

JEL Classification: I18, I12