Impact of tobacco-control regulation on smoking behaviors: New evidence

Tobacco use is the single most preventable cause of disease, disability, and death in the U.S. today, being responsible for more than 480,000 deaths per year.  The tobacco landscape today is very different with many new products and substitutes for cigarettes.  While smoking rates have declined over the past two decades as information regarding the negative health effects of smoking has diffused, this decline has leveled off and almost 1 out of 5 adults remains a current smoker.  Furthermore, this average prevalence masks considerable differences in smoking rates across socio-demographic groups.  This study provides new evidence on the effects of state-level cigarette excise taxes and tobacco control spending on smoking behaviors using the most recent data spanning the past decade. 

Most studies on the economics of smoking have relied on older data (when the tobacco landscape was different) and focused either on tax rates or on spending on anti-tobacco program but generally not both in the same models.  Furthermore, there is a concern that those who have quit smoking (or not initiating smoking) may be those who are most responsive to these policies; hence, the remaining smokers who continue to smoke despite the information on adverse health consequences may be relatively hardcore smokers who may not be responsive to cigarette costs and anti-smoking messages.  On the other hand, the availability of newer forms of nicotine delivery systems (for instance, electronic cigarettes) may have led some smokers to become more responsive to the cost of cigarettes.  This study sheds light on this question and assesses whether responsiveness to costs and other regulation has changed in recent years.

Empirical specifications are based on the Behavioral Risk Factor Surveillance System, a large national individual-level dataset conducted by the CDC, spanning 2000-2013 and yielding about 5.4 million person-wave observations.  Information on cigarette taxes and anti-tobacco spending is merged based on the state of residence and year of interview.  Estimates from fixed effects models imply that while individuals do continue to respond to cigarette costs (lower consumption as taxes increase) and also generally to anti-smoking programs, these responses are relatively inelastic and have decreased over time.  Specifically, the price elasticity is estimated at -0.14, which compares to estimates ranging from -0.3 to -0.5 based on older data.  There is also considerable heterogeneity in these responses across socio-economic characteristics.  These estimates have implications for guiding effective tobacco control programs over the next few decades.