Economic Stress and Cigarette Smoking: Evidence from the United States

Abstract

This paper uses pooled data on U.S. states for the post-MSA period to estimate the demand for cigarettes, with the main contribution lying in considering the effects of economic stress/uncertainty. Different measures of economic stress – standard deviations and averages of unemployment and property prices – are considered. Greater economic stress is found to lower cigarette smoking across various specifications. Other findings largely support the literature on cigarette demand – price effects are negative, border price effects are positive and the effect of income is negative.