Working Paper: NBER ID: w22296
Authors: Michael F. Pesko; John A. Tauras; Jidong Huang; Frank J. Chaloupka IV
Abstract: We use data from the Tobacco Use Supplements to the Current Population Survey from 2006-2015 to calculate cigarette price elasticities of demand using four alternative cigarette tax/price measures that compensate for the local tax environment to various extents. We use both state-level prices and local-level prices from 386 sub-state areas of the United States. We estimate a price elasticity of total demand of -0.38 using the price measure most strongly compensating for the local tax environment, and significantly lower elasticities for other popular cigarette price measures. We also find greater price responsiveness for adults that are younger, higher income, and higher educated.
Keywords: cigarette price elasticity; tobacco control; local tax environment
JEL Codes: I12; I18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Price (TUSCPS measure) (P22) | Demand (cigarettes) (D12) |
| Price (TUSCPS measure) (P22) | Price Elasticity (total demand) (D12) |
| Price (TUSCPS measure) (P22) | Price Elasticity (young adults) (D12) |
| Sociodemographic characteristics (J21) | Price Elasticity (demand) (D12) |
| Area-level unemployment rates (R23) | Price Elasticity (demand) (D12) |
| Anti-smoking sentiment measures (I12) | Price Elasticity (demand) (D12) |