Download this Paper Open PDF in Browser

Behavioral Responses to Taxation: Cigarette Taxes and Food Stamp Take-Up

53 Pages Posted: 30 Mar 2015  

Kyle Rozema

University of Chicago - Law School

Nicolas R. Ziebarth

Cornell University

Abstract

This paper investigates a previously unexplored behavioral response to taxation: whether smokers compensate for higher cigarette taxes by enrolling in food stamps. First, we show theoretically that increases in cigarette taxes can induce food stamp take-up of non-enrolled, eligible smoking households. Then, we study the theoretical predictions empirically by exploiting between and within-household variation in food stamp enrollment from the Current Population Survey as well as data from the Consumer Expenditure Survey. The empirical evidence strongly supports the model predictions. Higher cigarette taxes increase the probability that low-income smoking households take-up food stamps.

Keywords: cigarette taxes, food stamp take-up, tax pass-through rate, unintended consequences

JEL Classification: L66, H21, H23, H26, H71, I18

Suggested Citation

Rozema, Kyle and Ziebarth, Nicolas R., Behavioral Responses to Taxation: Cigarette Taxes and Food Stamp Take-Up. IZA Discussion Paper No. 8907. Available at SSRN: https://ssrn.com/abstract=2586410

Kyle Rozema (Contact Author)

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States

HOME PAGE: http://www.kylerozema.com

Nicolas Ziebarth

Cornell University ( email )

Ithaca, NY
United States

HOME PAGE: http://www.human.cornell.edu/bio.cfm?netid=nrz2

Paper statistics

Downloads
67
Rank
291,636
Abstract Views
375