Estimating the Impacts of Cigarette Taxes on Youth Smoking Participation, Initiation, and Persistence: Empirical Evidence from Canada

Health Economics 19: 1264-1280 (2010)

Posted: 31 Mar 2013

See all articles by Anindya Sen

Anindya Sen

University of Waterloo

Tony S. Wirjanto

University of Waterloo - School of Accounting and Finance; University of Waterloo, Department of Statistics & Actuarial Science

Date Written: 2010

Abstract

In response to the widespread availability of illegal contraband, the federal and five provincial governments in Canada implemented a 40-60% reduction to cigarette excise taxes in February 1994. We exploit this unique and discrete policy shock by estimating the effects of cigarette taxes on youth smoking with data from the 1992-1996 Waterloo Smoking Prevention Program, 1991 General Social Survey, 1994 Youth Smoking Survey, 1996-1997 and 1998-1999 National population Health Surveys, and the 1999 Canadian Tobacco Use Monitoring Survey. Empirical estimates yield daily and occasional participation elasticities from 0.10 to 0.14, which is consistent with findings from recent U.S.-based research. A key contribution of this research is in the analysis of lower taxes on a panel of 591 youths from the Waterloo Smoking Prevention Program, who did not smoke in 1993, but 43% of whom confirm smoking participation following the tax reduction. Employing these data reveals elasticities from 0.2 to 0.5, which suggest that even significant and discrete changes in taxes might have limited impacts on the initiation and persistence of youth smoking.

Keywords: youth smoking participation and initiation, cigarette taxes

JEL Classification: H2, I1

Suggested Citation

Sen, Anindya and Wirjanto, Tony S., Estimating the Impacts of Cigarette Taxes on Youth Smoking Participation, Initiation, and Persistence: Empirical Evidence from Canada (2010). Health Economics 19: 1264-1280 (2010), Available at SSRN: https://ssrn.com/abstract=2241881

Anindya Sen

University of Waterloo ( email )

Waterloo, Ontario N2L 3G1
Canada

Tony S. Wirjanto (Contact Author)

University of Waterloo - School of Accounting and Finance ( email )

200 University Avenue West
Waterloo, Ontario N2L 3G1
Canada
519-888-4567 x35210 (Phone)

HOME PAGE: http://https://uwaterloo.ca/statistics-and-actuarial-science/people-profiles/tony-wirjanto

University of Waterloo, Department of Statistics & Actuarial Science ( email )

200 University Avenue West
Waterloo, Ontario N2L 3G1
Canada
519-888-4567 x35210 (Phone)
519-746-1875 (Fax)

HOME PAGE: http://math.uwaterloo.ca/statistics-and-actuarial-science/people-profiles/tony-wirjanto

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