Taxation, regulation, and addiction: a demand function for cigarettes based on time-series evidence.
This work analyzes the effects of prices, taxes, income, and anti-smoking regulations on the consumption of cigarettes in California (a 25-cent-per-pack state tax increase in 1989 enhances the usefulness of this exercise). Analysis is based on monthly time-series data for 1980 through 1990. Results show a price elasticity of demand for cigarettes in the short run of -0.3 to -0.5 at mean data values, and -0.5 to -0.6 in the long run. We find at least some support for two further hypotheses: that antismoking regulations reduce cigarette consumption, and that consumers behave consistently with the model of rational addiction.
Department of Economics, University of California, Berkeley 94720.
T E
TE
Keeler
T W
TW
Hu
P G
PG
Barnett
W G
WG
Manning
D002140:California / Q000453:epidemiology; D003625:Data Collection; D005069:Evaluation Studies as Topic; D005249:Fees and Charges / Q000706:statistics & numerical data; D015438:Health Behavior; D006801:Humans; D007182:Income / Q000706:statistics & numerical data; D016018:Least-Squares Analysis; D008960:Models, Psychological; D012907:Smoking / Q000191:economics* / Q000453:epidemiology / Q000331:legislation & jurisprudence; D013660:Taxes / Q000331:legislation & jurisprudence*; D014029:Tobacco Use Disorder / Q000191:economics* / Q000453:epidemiology