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Youth Smoking, Taxes, and Anti-Smoking Sentiment Jae-Young Lim Korea University. Prevalence of Thirty-day Cigarette Use in the U.S. Healthy People 2010. Reduce cigarette use in the past month by 9th through 12th graders from 36% in 1997 to 16% in 2010.
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Youth Smoking, Taxes, and Anti-Smoking SentimentJae-Young LimKorea University
Healthy People 2010 • Reducecigarette use in the past month by 9th through 12th graders from 36% in 1997 to 16% in 2010. • Reduce initiation of tobacco use among children and adolescents. • Increase in combined federal and average state cigarette tax from $0.63 in 1998 to $2.00 in 2010.
Conventional wisdom • "The price of tobacco has an important influence on the demand for tobacco product, particularly among young people" (USDHHS 2000). • "If cigarette price were increased by 1% youth smoking participation would decrease by 0.68%" (Chaloupka and Grossman, 1996).
Recent controversy • Notable exceptions to the consensus: - Wasserman et al. (1991) - Douglas and Hariharan (1994) - Douglas (1998) - Gruber (1999) - DeCicca, Kenkel, and Mathios (2001)
State Cigarette Excise Tax Rates (As of January 1, 2000) MN 48¢ NY $1.11 KY 3¢ VA 2.5¢ NC 5¢ CA 87¢ TN 13¢ SC 7¢ AL 16.5¢ GA 12¢ FL 33.9¢
Research problem • Most previous economic studies rely on cross-sectional variation due to differences in state taxes to identify the price elasticities. • These cross-sectional studies estimate price effect without controlling for the unobservable state specific characteristics.
Research questions • Each state may have specific characteristics affecting youth in their state to smoke. • These state specific characteristics maybe correlated with state cigarette tax. • If correlated, the previous cross-sectional studies may yield biased estimates of the price effects.
Purpose of this study • Develop a new measure of state specific anti-smoking sentiment. • Re-estimate price effect on youth smoking with the additional control variable of state specific anti-smoking sentiment. • Suggest if higher price prevent youth from smoking.
Methodological approaches • Measure state specific anti-smoking sentiment. • Cross-sectional analysis - Include the measure of anti-smoking sentiment. • Longitudinal analysis - Include state fixed effects. - Include the measure of anti-smoking sentiment.
Measure of anti-smoking sentiment • The CPS Tobacco Use Supplement collected in September 1995 and May 1996. • Nine questions about smoking attitudes. • Conduct principal component analysis. • Use the estimated first component as a measure of state specific anti-smoking sentiment.
The CPS questions for smoking attitudes • "In restaurant, do you think that smoking should be allowed in all areas, in some areas, or not allowed at all?" • Ask the same questions for hospitals, indoor work areas, bars and cocktail lounges, indoor sporting events, and shopping mall.
Which statement best describe the rules about smoking in your home? -No one is allowed to smoke anywhere. - Smoking is allowed in some places or at some time. - Smoking is permitted anywhere • "Do you think that giving away free samples by tobacco companies/advertising tobacco products should be always allowed, allowed under some conditions, or not allowed at all?
Measure of youth smoking • The National Longitudinal Study of Adolescent Health (NLSAH). - The first wave: 20,745 7th-12th graders in 1995. - The second wave: 14,738 8th-12th graders in 1996.
Ever and current smoking • "Have you ever tried cigarette smoking even just one or two puffs?" • "During the past 30 days, on how many days did you smoke cigarettes?" • "During the past 30 days, on the days you smoked how many cigarettes did you smoke each day?"
Onset smoking • "How old were you when you smoked a whole cigarette for the first time?" • "How old were you when you first started smoking regularly?"
Cross-sectional analysis • Estimate two part model for current smoking. - Probit model for smoking participation. - Regression model for conditional consumption of cigarettes. • Estimate probit model for ever smoking.
Estimation strategy • Smokingijt = α0 + α1 Pricejt + α2 Xijt + εijt • Smokingijt = β0 + β1 Pricejt + β2 Xijt + β3 Anti-smoking Sentimentjt +εijt
Longitudinal analysis • Create longitudinal samples based on the retrospective information of age on onset of smoking. • Estimate discrete time hazard models. - Smoking experimentation. - Onset of regular smoking. - Onset of regular smoking for experimenters.
Control variables for the longitudinal analysis • Time varying variables: age, age2 , cigarette price, and year dummies. • Time constant variable: sex, race and ethnicities, number of siblings, family composition, urbanicity, region, the CPS measure of anti-smoking sentiment, and state dummies.
Estimation strategy • P (Smokingijt = 1) = Φ (α0 + α1 Pricejt + α2 Xijt ) • P (Smokingijt = 1) = Φ (β0 + β1 Pricejt + β2 Xijt + β3 State fixed effectsj ) • P (Smokingijt = 1) = Φ (γ0 + γ1 Pricejt + γ2 Xijt + γ3 Anti-smoking sentimentj )
The first finding • Without controlling for the state specific anti-smoking sentiment, estimated price effects are negative and generally significant. • With controlling for the state specific anti-smoking sentiment, estimated price effects are small or positive.
Conclusions • Previous cross-sectional economic studies may yield biased price effects. • Higher price may not prevent youth from smoking. • Increase of anti-smoking sentiment may be the better policy than increase of price for the prevention of youth smoking.