Taxes, Cigarette Consumption, and Smoking Intensity: Comment

Abrevaya, Jason; Puzzello, Laura

doi:10.1257/aer.102.4.1751

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American Economic Review: Vol. 102 No. 4 (June 2012)

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Taxes, Cigarette Consumption, and Smoking Intensity: Comment

Article Citation

Abrevaya, Jason, and Laura Puzzello. 2012. "Taxes, Cigarette Consumption, and Smoking Intensity: Comment." American Economic Review, 102(4): 1751-63.

DOI: 10.1257/aer.102.4.1751

Abstract

This paper re-examines Adda and Cornaglia's (2006) evidence on the compensatory behavior of smokers who, in face of higher taxes, are found to reduce their consumption of cigarettes while maintaining their cotinine—a biomarker for nicotine—levels constant. This comment examines the robustness of the empirical findings in Adda and Cornaglia (2006) using: appropriate clustered standard errors, a larger sample from the same years and survey as the data in Adda and Cornaglia (2006), cigarette-prices instead of and in addition to cigarette-taxes, and sampling weights. The empirical findings of Adda and Cornaglia (2006) are not robust. Further, little systematic evidence of compensatory behavior is found among subsamples of smokers.

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Authors

Abrevaya, Jason (U TX)
Puzzello, Laura (Monash U)

JEL Classifications

D12: Consumer Economics: Empirical Analysis
H25: Business Taxes and Subsidies including sales and value-added (VAT)
I12: Health Production