Taxes, Cigarette Consumption, and Smoking Intensity
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 for tax hikes by extracting more nicotine per cigarette. Our study makes two important contributions. First, as smoking a given cigarette more intensively 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 estimation biases.
Document Type: Research Article
Publication date: 2006-09-01
More about this publication?
- This title will no longer be available via Ingenta Connect from May 15, 2017. Please contact the publisher at email@example.com for information on how to continue access to this title.
- Editorial Board
- Information for Authors
- Subscribe to this Title
- Membership Information
- e-Publications for AEA Members
- Ingenta Connect is not responsible for the content or availability of external websites