Why Understanding Smoking Bans is Important for Estimating Their Effects: California's Restaurant Smoking Bans and Restaurant Sales

43 Pages Posted: 13 Sep 2006

See all articles by F. Andrew Hanssen

F. Andrew Hanssen

Clemson University - John E. Walker Department of Economics

Robert K. Fleck

Montana State University - Bozeman - Department of Agricultural Economics and Economics

Date Written: September 5, 2006

Abstract

A large literature has sought to determine whether smoking bans help or hinder restaurants. Much of the literature improperly specifies its econometric equations, and thus mistakenly infers causality. Examining the relationship between restaurant smoking bans and restaurant revenues in 267 California communities, we reach two main conclusions. First, California's municipal restaurant smoking bans are endogenous in critical way - restaurant sales growth (or something correlated with restaurant sales growth) appears to cause restaurant bans, not vice versa. Consequently, failure to control properly for trends can produce spurious evidence of causation. Second, ban heterogeneity (e.g., state vs. local) can be exploited to sort out - or rule out - causal effects. In other words, pooling data and treating smoking bans implemented at different levels as homogenous (as many studies do) ignores an important source of information, and is likely to lead to erroneous conclusions. Our analysis holds lessons for the many studies that have examined the arguably more important question of how smoking bans affect smoking rates.

Keywords: smoking ban, smoking, restaurant, cigarette, differences in differences

JEL Classification: B40, C10, D21, D78, K20, K32

Suggested Citation

Hanssen, F. and Fleck, Robert K., Why Understanding Smoking Bans is Important for Estimating Their Effects: California's Restaurant Smoking Bans and Restaurant Sales (September 5, 2006). Available at SSRN: https://ssrn.com/abstract=929583 or http://dx.doi.org/10.2139/ssrn.929583

F. Hanssen (Contact Author)

Clemson University - John E. Walker Department of Economics ( email )

Clemson, SC 29634
United States

Robert K. Fleck

Montana State University - Bozeman - Department of Agricultural Economics and Economics ( email )

P.O. Box 172920
Bozeman, MT 59717-2920
United States
406-994-5603 (Phone)
406-994-4838 (Fax)

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