Date of Award
Bachelor of Arts
This paper utilizes two waves of data from the Current Population Survey Tobacco Use Supplement as well as data from the Tax Burden on Tobacco to analyze the impacts of tobacco tax hikes on both smoking participation and daily cigarette consumption. By implementing a difference-in-differences approach, I find that there is a positive insignificant effect of cigarette excise tax hikes on the probability of smoking, while there is a negative insignificant impact on daily cigarette consumption. My empirical results suggest that the tobacco control strategy of raising cigarette taxes seems to only generate tax revenues but is not an effective tool in reducing either smoking participation rates or cigarette consumption. In this case, some possible explanations for my findings are cigarette demand inelasticity, tax salience effect, substitution effect, or inefficient allocation of tax revenues.
Chen, Yijun, "Tobacco Taxation and Cigarette Consumption: Do Cigarette Tax Hikes Reduce Smoking Participation and Cigarette Consumption?" (2019). Economics Student Theses and Capstone Projects. 110.