Adda, J; Cornaglia, F; (2006) Taxes, cigarette consumption, and smoking intensity. AM ECON REV , 96 (4) 1013 - 1028.
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This paper analyses the compensatory behavior of smokers. Exploiting data on cotinine concentration-a metabolite of nicotine-measured in a large population of smokers over time, we show that smokers compensate for tax hikes by extracting more nicotine per cigarette. Our study makes two important contributions. First, as, smoking a given cigarette more intensively is detrimental to health, our results, question the usefulness of tax increases. Second, we develop a model of rational addiction where agents can also adjust their intensity of smoking, and we show that the previous empirical results suffer from estimation biases.
|Title:||Taxes, cigarette consumption, and smoking intensity|
|Keywords:||SERUM COTININE LEVELS, ETHNIC-DIFFERENCES, RACIAL-DIFFERENCES, LUNG-CANCER, NICOTINE, SMOKERS, ADDICTION, TAR|
|UCL classification:||UCL > School of Arts and Social Sciences > Faculty of Social and Historical Sciences > Economics|
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