Wednesday, December 16, 2015

Effect of Further Cigarette Tax Increases on Youth Smoking Appears Minimal or Nil

Most states and many cities have in the last 20 years initiated or raised tobacco excise taxes.  The fact that both the amount and rate of tax increases differ widely across jurisdictions provides economists valuable data to gauge the effect of these adjustments on smoking behaviors.

Historically, higher cigarette taxes resulted in decreased smoking, especially among youths. In 2008, economists Christopher Carpenter and Philip Cook published a study concluding that “large state tobacco tax increases [from 1991 to 2005] were associated with significant reductions in smoking participation and frequent smoking by [high school students].” (abstract here).  They found that a one-dollar increase in the cigarette tax was associated with a 5.9 percent decrease in current (past 30-day) smoking and a 4.1 percent decrease in frequent smoking (in the past 20 days).  They used information from the Youth Risk Behavior Surveys for that period. 

However, there is little evidence that cigarette tax surges over the last 10 years discouraged youth smoking, according to economists Benjamin Hansen (University of Oregon), Joseph Sabia (San Diego State University) and Daniel Rees (University of Colorado Denver).  They looked at state cigarette taxes and youth smoking rates during 2007-2013, and their results were published at the National Bureau of Economic Research (here).

Hansen and colleagues found that a one-dollar increase in the cigarette excise tax was associated with a 0.7 percent increase in current smoking… and a 0.2 percent increase in frequent smoking.  Neither result was statistically significant.

I have noted previously that youth smoking rates declined substantially over the past several decades (here).  Hansen et al. acknowledge that “youth smoking participation fell precipitously from the late 1990s to the mid-2000s.”  It now appears, however, that further increases in cigarette taxes may not produce additional reduction in youth smoking rates.


Anonymous said...

As an aside, I think Eric Garner's death was indirectly a result of NYC/NYS's outrageous tobacco excise taxes. The Economist magazine warned several years ago that northeastern states were potentially creating a new black market by increasing taxes on tobacco products and indicated that the I-95 corridor, running up the eastern seaboard, traditionally a transshipment corridor for hard drugs, would lend itself well to the trafficking of tobacco products on the black market. Tobacco producers to the south would be unable to resist selling high-quality black market tobacco to the northern markets. Mr. Garner made an income from this arrangement, until the NYPD got their hands on him (pun intended). This, I'm sure, was completely removed from the rationalization of the northeastern legislatures' braintrust who believe, with all certainty, that high tobacco taxes save lives.

Michael J. McFadden said...

There's actually no real thinking to be done. His death was most certainly a direct, and known and expected, result of raising the taxation to criminal levels. It's simply seen as collateral damage in the war on smokers.