Do Higher Tobacco Taxes Reduce Adult Smoking? New Evidence of the Effect of Recent Cigarette Tax Increases on Adult Smoking

28 Pages Posted: 18 Aug 2012 Last revised: 30 Jul 2021

See all articles by Kevin Callison

Kevin Callison

affiliation not provided to SSRN

Robert Kaestner

University of Chicago; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: August 2012

Abstract

There is a general consensus among policymakers that raising tobacco taxes reduces cigarette consumption. However, evidence that tobacco taxes reduce adult smoking is relatively sparse. In this paper, we extend the literature in two ways: using data from the Current Population Survey Tobacco Use Supplements we focus on recent, large tax changes, which provide the best opportunity to empirically observe a response in cigarette consumption, and employ a novel paired difference-in-differences technique to estimate the association between tax increases and cigarette consumption. Estimates indicate that, for adults, the association between cigarette taxes and either smoking participation or smoking intensity is negative, small and not usually statistically significant. Our evidence suggests that increases in cigarette taxes are associated with small decreases in cigarette consumption and that it will take sizable tax increases, on the order of 100%, to decrease adult smoking by as much as 5%.

Suggested Citation

Callison, Kevin and Kaestner, Robert and Kaestner, Robert, Do Higher Tobacco Taxes Reduce Adult Smoking? New Evidence of the Effect of Recent Cigarette Tax Increases on Adult Smoking (August 2012). NBER Working Paper No. w18326, Available at SSRN: https://ssrn.com/abstract=2131696

Kevin Callison (Contact Author)

affiliation not provided to SSRN ( email )

No Address Available

Robert Kaestner

National Bureau of Economic Research (NBER)

5 Hanover Square 16th floor
New York, NY 10004
United States

University of Chicago ( email )

1155 East 60th Street
Chicago, IL 60637
United States

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