Series editor(s): Prof. Michael Grossman, Prof. Bjorn Lindgren, Prof. Robert Kaestner, Prof. Kristian Bolin
Subject Area: Health Care Management/Healthcare
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|Title:||The Fires are not out yet: Higher Taxes and Young Adult Smoking|
|Author(s):||Philip DeCicca, Don Kenkel, Alan Mathios|
|Volume:||16 Editor(s): Björn Lindgren, Michael Grossman ISBN: 978-0-76231-233-7 eISBN: 978-1-84950-361-7|
|Citation:||Philip DeCicca, Don Kenkel, Alan Mathios (2005), The Fires are not out yet: Higher Taxes and Young Adult Smoking, in Björn Lindgren, Michael Grossman (ed.) Substance Use: Individual Behaviour, Social Interactions, Markets and Politics (Advances in Health Economics and Health Services Research, Volume 16), Emerald Group Publishing Limited, pp.293-312|
|DOI:||10.1016/S0731-2199(05)16014-2 (Permanent URL)|
|Publisher:||Emerald Group Publishing Limited|
|Article type:||Chapter Item|
Following the standard approach, we use the 2000 wave of NELS to estimate an empirical model of smoking participation at a point in time. However, we exploit the longitudinal nature of NELS to make several important extensions to previous research on the economics of smoking. First, because we know respondents’ previous states of residence, we can explore the role of past taxes. As is discussed in more detail below, when taxes are serially correlated the approach used in most previous studies yields estimates of the impact of current taxes on current smoking participation that are biased away from zero. This problem is exacerbated by the fact that the standard approach (as applied to U.S. data) relies on tax variation across states for identification. If taxes are correlated with unmeasured anti-smoking sentiment at the state level, the standard approach is again biased towards finding strong tax effects. In fact, when we estimate a benchmark model that takes the standard approach, we obtain the standard result. In probit models current cigarette taxes are negatively and statistically significantly associated with smoking participation in 2000. We next include in our model both the tax the young adult faced in 1992 and the current tax. We find that only the 1992 tax is statistically significantly associated with smoking participation in 2000.
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